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5^S -■ ■v.^estet, rview 'ork '4609 uSA 

'-^S "f. 432 0300 Phone 

^^ -'t.i ^se - 6989 - fo* 




■ 'e 


Of Elementary Legal Text-Booki for Commercial Clasioi. 

I. Sti' yens' Mercantile Law. 

MMli i:.liti..ii. Hy IlKKiiKLr .r,u.ii!-, |lttrri-t<>«w. 19'J0. I'litr lU.'. i.i/ url ■ 
p'r.l«);p r,,/. , Xlln. 

♦,• Sil.if.l l.y till- liistinit. (,f ( i,nrl. rrrt AM-.,uiit.iiitM in KriKliiml, llii- 
III. ..rporstiil SKi.iy i.l Ari<iiiiit.iiit», ilii- liiKtitiitr of Secreurio-., ljiiiviri.iiy 
< 'iIUko, I ;inlilT. itc, I tc, m a text lumk fi.r tlicir iMuuinltiinn. 

3. rndcrhill's Law of Partnership. 

My A. liMMiiHiM, MA.. I.I.h., Mil.. ..f the r.inTi'Vamiiii; i'.iiiti!.fl ol tlir IIIkIi 
<^"tirt. Ihii.l K.liti.iii. 1919. I'Mif K.>-. tiK. ; |.„rta(fc> t-r e\lra. 
*,* .^,i |,y III- liiftitut.iif I liart'i.'.; AciniiiiiaiitH for Inland «» ttxtlMx.k. 
.t- Kedman'.s Law of Arbitrations and Award.s. 

'"""'' ^■'lltiol^ I'.y .1. II. IIii.MxN, liHriistir ai-i«w. ( liei-.) 19" i. Priic 18< 
ri.'t ; i).,Htu!:" ..\ti.i. 

*,* .'-•Ifct.-.ibv the lnMiliil...,t ( hiirf^ml Aco.uiit.intN, the lnr,.ri,oratM .<cKh'tv 
ol .\ir.,niit,-itit.«, plc. UK a if.\t l"H,k hir ili.-ir exaniiiialii.ns. 

4. kohhins and Maw's Law of Executors and Administrators. 

l-ounh l..litinn, liy K. I . Ma« . l(« . IimiH. I'ri. •■ ir,.<. uft inrntaKO 
•'■'. ••xtra. ' ' " 

... *•* .^"''■•'t';< liy «li ' Itirurporiil.-.l .S..<i.ty .,1 A<t..auta!its ami the <Ar.liff llnr.iuiri. 
Irchiiical s.h.H.l as a t.'.\t-li...,k fi.r tlnir i-.\aniinati..tis. 

5. Topham's Company Law. 

liltl, K.liti. „. l;y AM i.Ki, K. |.„MrvM. I.I..M.. „f I,i,„-olnV Inn, llarri.t.r-al-l,aw. 

l.-aior m th. Law ,,t l;,al rruporiy ami <'i.iiveyamiun to llie < oun. il ul Ugai 

Kiii.'.iti,,!!. IHI'.!. I'rpc 7.<.6./. lift; piisiaR,- 6,<. i.xtra. 

•■ 111 i-iuJpnt-. Kf «,,nl.| say. • l,>ail any other Look vou like, but ilon't to in for Pxa.n.nMi.,n without Mmlyinp- your "Tophaii.' thoroORhly. ',,,/,,,,,. 

ft. Pratt and Kedman's Income Tax Acts. 

Nir.Ih K,lilioii. By .1 II. .,f the .Midith- I Vniple, H.irrist..r-Ht-Ijiw. 1916 
Pno- 9.-. 6./, U't; pi.sI.iKi. t;.i. i.xtr.i. 
*,* lieivninnii.hil hy ilM-So,ieiy ,,f Arconi.tsnt. a-< a le.\t-lK)ok lor exami- 

7. Sykes' Kanking and Currency. 

lo.irth i:.litio„. Ity Kkmm ..vh,..; li.A. .ixon, rorn>.rlv of il„. LoimIoo and 
County Ka.ik. i .-, turer o« Hankin- ainl . urrenrv to th- I.o.mIo,, < lianil .-r of 
romni.r.e. |»i>. I'riic f,.s-. net ; i.ostaKo 4.^ e.sti'.i. r ol 

V .Appoii,t.,i as a text I k hv tii.- insiitule of Itankers f,,r their exnuiinatinns. 

H. Ciemson's Methods and Machinery of Business 

ill'," . i""-. "^' "•„';'•' "-'■^- l-""'l>'n ChanilHT ol Comu.enH. T-achers' 

l'ilil..ui,| Lecturer at ITin. ijial London Coniinerdal Institutes, and at I,o,^^^l" 

"umy CouiKilC-ntres. l.m. Price ,1,. ,;,/. n.-t ; postaee 4./ extra 

■ U e n.nKTatulate the author, who is a practical teacher, upon the ciuMilation 

tlrZ -'"'"'""^"''v -"""■' t" "- 0"mu..nials,,^lenl/ Jr■/,Z^., o/™'mrr" 

''■liM'.f."'?".?,!^*^'"" •''■°«»'«'"r«^ »"«« Business Correspondence. 

H-itm a nuideto ., ron.n.ereial Ity II. - i ,:,m>.,n,'^Lo„,I.„, chaml>er of 
..nnnerce, le;,cl,e,s |.,pl„n,a, Lecturer at prin. ipal l.u .doi, Co, mVrc "l InstU 
1./ '^im "" "■' ^""""' '■"""" '""■ '■"'■'• --■ «''• ■"■' ; I-BUge 

10. Steele's Present-Uay ISankini;, 

Hyl-i.AN.i-. K. S,,K,.,, l.Vlio« ol tl„. In^iiiul Hankers, M,u,..(in,e l,u„r,.r 

net ""^/i/^ri;''.:;:;;::'''^ '''''■•■ '•"'"' ■'-"."■•.■,n.;.e."';;,;;: i:;;;,?;:,: 

Ha;„!i';:;. ^:!i?;;;:i;!:'; "" "■- '""P > - ^ -Me .it„e K„..y,.|.,p:vdia or 

11. I it/patrick's Hook-keeping. 

Hy.l. l-n/evn;„K, f. ,A. .-t the li, n, ..f K|,p:,|ri, k. .iralmn. (ireenw I .t C, 

> oinni. rt. . i.uil. I rice ,',.<. net ; pimta^e ijj. extra. 

lU nKKUOKTU & "0.,"iii:i;YA"uK TKMPLt; liAK. W.C.i. 


ELEMENTS ,,,^,7 



Siytb leMtion. 



"/ till' hiiiir 'I'l'iii/i/i ^ H'l I > tfti r-iil- I.iiir, 
f.iiir I'litiii ti, Uir. f'/i'irfniil Airniniliiuls .-^/n'lfn/.y' Sm-n'ti/ ,,/ Intnl., 


^^\l'^\j' • -'X^AVN^ 

''^ml COURT 


BUTTEUWORTII \- CO.. Bell Yahl, Templi: ]J.\i: 

^VIINKV: BlTTKRWoliTir & <i.. ( \rxTi;AI.!.\). I TD. 

I Af'TTTA: r.rTTKKWciurii ilk 11). (imha), i.ti>. 

wrSMl'Ki; : lilTTKKVMiUTII & rii. (( \N\I>\), l.TI>. 

U Kt.LINCTOS (\./.) : li( TTKKWiiUTli it en. ( A I STK Al.r \), I.ll'. 



ruKViors editions. 

First Kdilidn hy T. M. Stkvkns, ^[..\., IJ.C.L. 

I'liird ,. ,, Jacobs, 15. A. 

(Tiaiisliited into French liy 
T'rofosBor L. EscAini.) 
Fifth „ ,, Hi;uni:uT Jacui.s, 13. A. 



SiNCK the iiftli ('(litioii oi" tlii.s work was issiu'd, 
t!i(' Cirti;it W;ir wliidi li;ia swept over the world 
lias stain|»('<l its impress deeply on our legal 
system. Many of the legislative clian<fes, thoui,di 
still operating, are merely transitory, and all 
referenee to these is omitted ; hut apart from 
speeial legislation, there is naturally a great 
mass of material illustrating the effect of war 
(m eoutracts. If no fresh principles of the eom- 
nu)n law have heen enunciated, the old ones have 
heen applied to sueii a variety of circumstances, 
and their full meaning has l>een so developed, 
that they i)resent all the appeaiance of new- 
law. I have (jndeavoured to treat this subject 
ade(juately without giving it any undue pro- 
minence. The present edition has been brought 
uj) to date in the usual way, and in preparing 
it I have availed myself of the opportunity to 
include a few cases which wi're not referred to 
in previous editions, hut which either elucidate 
an important principle or assist the student 

\ I 


to uinl.T^i.iii.l III, Miu.|.-ni aiitlioiitirv The 
'•llil|.lr| on H.-illklupt.y li,,^ I,,.,. II ir-wiittcll on 
\\w. l..i-,is ..I' liir . o.iilyiiinr .\,.f ,,t 11)11. \ 
•■''it;iiii .•iiiiuuiif u| ,,|rtc jiiattiT htts l.cen dc 
I'-tt'tl, l.ul iiMiuitlistiiiuliiin this it li;i>< ii..t, Ix-cn 
ixjs.siltl." to.ivdid fi sli-ht iiirn'aso in the sizr ,.f 

llu' l.nok. Ml. I'. I'oltTi:!; F.M SSKIT, ]i..\., |,I..|i., 

of till' Iiiii.i 'rciiipli', BaiTistci-Ht-Liiw, is agaiii 
r.'sj)oiisil)|r ior III, cjiaptcr on " ( 'unipanN's," 
an.l .Mr. 15. W. Dkvas, MA., of tli. Jnn.'r 
'IVmiili', l*.aiTisf.Tat-La\v. lias |) the 
Aj.pen^lix .Ml '•I'jiifnls, Tra<lo Marks, Mer- 
'•handisc .\lark.s, and Copvriiihf." 

i ;iin iiidrliitd to my IVicnd Mr. I'. T. JiLAcK- 
^\KiL, B..\., ..f the Innrr Temple, Harri.ster-iit- 
Ji-'iu, tor.siinnv.stiii.n impiovi-mentson tlie previous 

HKHI'.KI.'T .IA('(Mi.'<. 

1 IfAH, KLHI' HllLIHN,;-,, 

'J'KMi'Li:. j;.{'. 

J <i nil II III, I'.l'iO. 



TAiir.K (>i- Statutts 
r*iii n ui.' ''asks 


. xiii 


(iRNERAI. \'|K\V (.I- THE LaW »iP CoNTR \f T9 

Dolinitiiin of Ci.iitract 

Kiiul.i «if ('(jiitiiict 

Koniiftlion of a Contract 

IvtHfiitialH of n Contrtvct 

I'roposiil ami Acceptance 

TontraclH uliitli the I>aw will not enforce 

Statutory Provision* 

Capacity to (,'ontract 

Contracts with Infanta 

Contrac^ts with Married Women 

Contracts with Lunatics and Drunken I'lTsons 
Contracts with Corporations and Comimnics 

Contracts with Bankrupts 

Ilights and Duties under the Contract 

Assignment of Hifthts 

Perfoimanco of a Contract 


Hight to Interest 

Breach of Contract 

Damages ... 
Termination of the Contract 

By Agreement 

ByBrcch .'.' [[[ 

By Lapse of Time 

By Impossibility 

FttUe Ueprebcutatiooa 

u 2 



TABLE t)K coNriov" 

• Ij;ni;k.\i. \ii;\v ,,i. the ] a.\ of (JuMHAtT.s- cuHluuu.d. 
False Kcpivscntatioiis — i oniiiiuiil. 
I'laudulcnt Misrepresentation ... 
Iiiiioocnt Misroj)useiitatioii 


Undiiu InliuoiKc and l)ui'cs.j 

Foreign Lan 





Will) may appoint anil l>e apjioinled Agent."- 

-Xpiiointinent of Agents 

'I'ermin.ii ion of Agency 

J{i.<,'ht.-< and Duties hetwcen I'rincipal and Agent 

Hreach of Warranty of Authoiily ... 

Faetors Act, JSSit 

Itolations with Tliird Parties 
Classes of Agents 


Deliuitiou of Partuershii) 

The Firm Name 

Formation of tlie Contract 

Who may be Partners 

IJifibts and Duties 


As between Par' nora 

Authority of ft Partner 

Projierty of the Firm 


Administration of Partnership Estate 


Limited Partnerships 


'I'lie C<jni})auy as a Going t'oncern ... 
'J'lie Formation of a Company ... 

The Memorandum of Association 

.Articles of Association 

The ProsiMJCtus 

tiliuruliolders and Shares . . . 

Capital, Dividends, and Debentures 

■J'ABI.K f>l-' (;ONTENTR. 


( OMI'ANU:S — CUlUuiUld. 

The (."onipany lu a (ioinj? Concern. — conltnunl. 

Tlio ^[anagenlt•nt of the Comi)any 

Directors ... 

Accounts and Auditors 
Meetin;;.s and Resolutions ... 

Private Companies 
The Company in Liquidation 

Compulwiry J.,iquidatioii 

Voluntary Litjuidation 

Tviquidation under Nii2)ervi.sion ... 

Transfer and Reconatruction 

.Arransements with ( 'reditors 



PART 111. 


The Sale OK CooDs 

Definition, etc. 

Who may sell 

Formalities of ♦he Contract 

Rights and Duties 

The Rights of the Buyer 

Delivery ... 

Conditions and Warranties 

Rights upon Breach of the Contract 

Rights of the Seller 

(a) Actions against the Buyer 

(b) Remedies against the Goods 

Transfer of the Property by Auction 


< leneral Principles 

Bills of Exchange 

Rights and Liabilities 

Discharge of the Bill 

Bills in a Set 

Foreign Bills 

Agreements intended to Control the Instrument ... 


Promissory Notes 

Bank Notes 


General Principles ... ... 

Life loauraaue 






























Insuk \.scK--c,nttiuna/. 
Fitc Inyuiance ... 

Marine iNsnuANCE 

.A.s.sii;iuilciit of I'lilicy 

In.surabli' Intcivst 

< Jam blini; Policies 

Disclosure iind ItfprcsciitMtidii- 


The Slip '' ' 

Kinds of .Marino Policies 

Form of Marine Policy 
He-la.surance ... 
Double Inaunmcc 

Alteration of a Policy 

Losses ... 

Notice of Abandonment 

Adjustment of Losses 


Return of tho Premium 



Common Carriers 

Limitation of Liability of Sea-carriers ^ 

Railway Companies 

The Contract of Ailieightment 


Notes on the Form of Charter-party 

Bill of Lading 




Nature and Formation 01 the Contract of Cuarantt'c 

Liability of the Surety 

Rights of a Surety [ 

Diseharge of the Surety 

Pawn, Mortoaiie, am> Lien 


.^^ortgage of Personal Property 

Bills of Sale 

Form of the Bill of Sale . [ . .' 


Possessory Liens 













Pawn. Moktoaok, anu Likn — cuntiniud. 

Lien — contiti nal 

Maritime T. ions ... 
K()iiital)l(' T.icns ... 

l'ei<i.slratic)U of u I!iiti-ili Siiip 

Af'qiiisition of Ovvnersliip of a 15ri'isii Siiip 

I'osilidu of Owners 

I'lwitinii of the .Mnstor. .. 

Salvage ... 

Position of t lie SeaiiUMi 
Stock Exchaxoe Traxsactio.ns 

Tlie llules of the Stock E.\p!ian!.'e ... 

Legal Ktfpct of the Huleg 

'I'lio P<jsition of the Broker ... 

<!aniblini; on tho Stock Ivxcliange ... 

FMank Transfers mill Forgeries 

Stamp Duties ... 




51 fi 



Who may he made Bankrupt 

Acts of Bankruptcy 


The Debtor's Property 

Debtor's IJuties 

Third Parties, and Debtor's Property 
The Debtor's Person 
Officers ... 

The Onieial Receiver ... 

Special Afaiiagcrs ... 

The Trustee 

Distribution of the Property ... 
Compositions and .Arrangi'ments 
Bankruptcy of Partnerships and Partneis 
Administration of Estate of Deceased Insolvent 
Small Bankruptcies 



Modes of Kefcience 
'Ihe Submission 





Akbitkations — coiUinucd. 

The Arbitrator pnd Umpire ... 
TJic Award 



... 593 

... 59H 



Trade Marks . . . 
Morchandisc Marks 

.. 003 

.. 607 

.. «I1 

.. 613 


2 & :i Ph. & M. c. 7. 
31 I':iiz. 0. 12 
21 Jao. 1, c. 3. 
0. 10. 

•i:) Car. 2, c. 3. 


(Sale of Horses) 24!t 

(Sale of Horses) 24!t 

(Statute of Monopolies, 1023) (i<)3 

(Limitation Act, 1623) 5. 20, 65, &t, K.'), 8)1, 

87. 115, 132, 188 

8.3 84,87 

8.7 85 

(Statute of Fraud.0) . . . 455, 450, 457 

8.1 4,119 

9.2 4 

8.3 llii 

a. 4 5, 0, 9, 101, 119. 132, 158, 252, 454 


252, 260 

c. 7. 

(Sunday Obscrvaneo Act, 1077) ... 

... 29 

3 & 4 Anne, c. 9. 

(Bills of Exchange) 

... .'{(Ml 

t & 5 Anne, c. 3. 

(Limitation of Time), s. 19 

... 85 

7 Anne, o. 12. 

(Diplomatic Privilcsea Act, I7(»8) 

... 18 

9 Anno, c. 14. 

(Gaming Act, 1710) 

... 29 

14 Geo. 3, c. 48. 

(Life Assurance .Act, 1774) 

... 305 

s. I 

... 305 

9.2 '. 

... 305 

s. 3 


c. 78. 

(Fires Prevention (Metropolis) .Vet, 



... .•ids 

.il (!eo. 3, c. 04. 

(East India Company Bonds Act, 



... 290 

iil Ceo. 3, c. 50. 

(Sculpture Copyright Act, 1814)... 

... 007 

9 (!co. 4,0. 14. 

(Statute of Frauds Amendment 



84, S7 


... 101 


... 253 

1 1 Geo. 4 & 1 Will. 

4, 0. 68. (Carriers Act, 1830) 

418, 424 

8. 1 


s. 2 

... 419 

s. 3 

... 419 


... 419 


... 420 


... 420 

1 & 2 Will. 4. c. 37 

(Tnak Act. 1831) 

... 01 


I'AULK (ij >lATiiTEs CITEL. 


;i & 1 Will I, c. 42. 

s. ;{ 

s. L's 

c. W. 
."* .V <i Will. (, <■. 41 
1 & 2 \w\. V. IKt. 

« & n Vict. f. 15. 

...SI, HV 

... S7 


■ ■ (i!) 

!•. Hi. 

c. .'?7. 

c. ;is. 

«'. KHi. 

c. ]0!t. 
17 & 18 \ict. c. 31. 

i8& 1!) Vict. c. UJ 

I'J & 20 Viet. c. <t7. 


2t A' 2.) Vict. o. 10. 
2r> S: 21) \ict. r. tiS. 

c. s;». 
:'.(> & 27 Vict. c. 87. 

•io & :n Virt, c. 2<j 

c. J 44. 

(liiinkof Knuian.l Act, lHH-.i). s.'a 
((.'aiuiii;; Act, IS35) 
(•ludpinciit.s Act, Is:j8) 
(.Viictionccrs Ad, |,s.45)_ 

s. 4 ... ['[ 

((•uini.anies flaiisos (■(.i..-.,li,lali,.n Aot' 

'««■>), s.!t7 ... . '4c 

(|.a.Hls (•|a„,.o.s Consolidation Act", 1845) 55 
>=.nkcr,.([,cIn,Kl)Ac<.J84r.)...(i 50 

(J.ank^ A-„tcs (.Scotland) Act, IR}.'",)^ 

(I!cal I'rnjiorlv Act, (815) L ^''^ 

p. ;{ .. •■• . .. ;■; ;• • -'•'ji; 

f(;a.ningAct, I84r.), 8. ]8" „, ,.,;' 

(Ka.hvay and Canal Traflic Act. JSr.t*),' ""' 

• (Hin^ofLadinfjAct'lSSo)' ■" ^^■^' ^"^^ 

B. 1 ... 

s..-} ■■■ - 44(J 

(Ale-ljantiic Law Ainendmcnt Act, IS^S'' 1: 
8.'.T ■■■ ■■■ 6.454 

s.!. ::: ■■■ ■■■ - 402 

8. JO 

«• '4 

(.\diniialty Court, Act, iHni ) 
(Fine Arts ('oi)yriRlit Aot, J8(;2) 

Si. 7 

.■^. S 
(('onii)aiiic,s Act, I8(i2) ... 
(.Savinj^s Hank Act, 18r);!),'8. 14.'.'.' 
(Hankina Companies' (.Shares) Act, J8(i7) 

(Policies of A.s.surancc A,(. lS(i7) '^'^' ^''^^' ^^ 
H. 2 ••■ _ "^ 

S3 ' " ■ *'"" 

.. 307 

84, 188 
• -. 85 
... 87 
... 87 
. 514 
•ll.-}, G20 
. . . 020 
020, (;2J 
... 101 



:(.{ & .•it \i(t. c. 10. 
:i.". A- ;{ti \ ict. c. !»:i. 


;;•> & j1 \ic(. I'. 111. (Policies of A^siiniiicr Act, 18(>7)— 


*'■■* ati? 

«■ '> •Mil 

:ii & ;iJ \'itt. c. 7J. {('oiiiity Courts Admiralty .Jiirisdictiou 

Act, JSGS), s. :t " -,]4 

c. list, (licgulatioii of i^lj|\vnv.s Act, isns). n. 14 425 

:il» A :!:! \ict. c. (i2. (Debtors Act, ISHK) ' 

8S. 4, ,-) ... ... ... .. 5(;-) 

(('oiniir;c' Act. ISTO), s. 4 r.!» 

(Pawnhrokcis .\rt, IKTlI) 47i' 

s- •'• 472 

*<• K' 47:i 

^•- " 47:5 

>* "' 47:{ 

'^ '" 473 

*-• i« 47:{ 

^- lit 47:{ 

^•-•» 473 

.}() \- J7 \ ict. c. 4S. (f^rgulation of H.Tilways Act, IH73) ... 42() 
c. (it). (Siiprciric Coiirt of .Iiidicalurc Act, 

1873) r>3, 102, JOS 

^•25 (t;) 53 

3/ it 38 Vict. e. 57. (Kcal Property Limitation Act, J874), s. 8 84 
c. ()2. (Infant.s' Helicf A(t, 1874) ... 20,32 

8- 1 32,34,38 

8.2 34 

3S & 39 \ ict. c. 53. (Canada Copyright Act, 1875) ... 013, «2I 

f. 91. ('trade Marks RerrLstration Act, 187."i) ... 007 
.'!!» & 40 Vict. c. 30. (Customs Consolidation Act, 1870), 

8. 42 

40 & 41 Vict. c. 59. (Colonial Stock Act, IS77) 

41 & 12 Vict. c. 31. (liilh of Sale Act, 1S7S) ... 

s. 4 


s. S 

s. 10 



K. 11 

B. 20 

c 38. (Innkeepers Act, 1878) ... 
II & 45 Vict. e. 41. ((.'onveyancins? and Law of Property Act, 

». 7 (e) 4,S'.> 



... 474 
475, 477 
... 475 
477, 478, 470 
477, 480 
... 483 
... 478 
479, 480 
... 480 
252, 487 



14 & 4.5 1101. c. 11. 

4.5 V Irt Virt. c. 43. 

t\ 01. 

(( onvcyanciiiK 'uA r.,iw of Property Act, 
1881) — cotiliiiurij, 
sa. J!», 20 .^■J^ 

'"■*"'" ! 03 

(BiIJs of Siilo Act (i87H) Amendment / st. 

•^82) ... 174,477.480,484 

"• ^ 484 

^•^ 484 

•"■M-') 482 

«• '^ 481,484,48.5 

"• ^ 477,478,479,484 

?. l» 

480, 484 

3. 10 

477, 478 

s. 12 

... 484 

B. 13 

... 485 

8. 15 

... 450 


... 475 


480, 482 

(Bdls of Exchanpc Act, 1882) .. 

. 6, 09, 304 

300, 332 


... 322 

S.3 (1) ;; 

5, 300 


5. 307 


... 307 

(4) (a) 

... 309 


... 311 

8. 4 

311. 347 

f. 5(1) ['. 

... SOU 


... 309 


... 309 

B. 7 

... 339 


... .W9 


332, 340 


... 319 


... 309 


... 309 


... 310 

(3) ;.".■ 

... 343 

.ss. 10, 11 

... 340 

s. 12 

309, 340 

H. 13 * [[ 

30. 310 

A. 14 "'' '" 

... 340 

(■2) '"" 

... 340 

'^. ]:> 

... 309 

!. ii; \[] [[[ 

... .'{27 



).>4 4ii Vii-t. c. til. (B 


illBof Kxchnncfi Act. 1882)— fonJi'nwfrf. 

«. 17 (1) .113 



s. 18 


s. 10 


s. 20 



... 310 

s. 21 (1)(2)(:J) .. 


f. 22(1) 




8. 2:i 


?. 21 








8. 28 


s. 2!t 

322, .323 





a :{() 




3.:!! (1)(2)(3)(4 


... 3U> 









(5) . . 


s. 33 






s. ;j5 


b. 3t»(2) 






s. 37 






9 39 




=-.40 (2) (3) 













\U & W) Vict. c. 

lAIiLE OK MAllTlvS ClIK].. 


I. (Hills of Kx.h.wi^o Aft, ISHJ)- 


«■. n(i)(j){3) 


8. 45 ... 

•Ul, -M'i 

B 4fi 




8 48 

:U7, .TM> 

•• 4')(l) ... 


(-') ... 


(3) ... 


(4).. ... .. 






(7) ... 


m ■■■ 





















:1I7, 347 

























s. ft.'} (1) ... 


9 •'54(1) (2; 






a. 5(J 


8 57 

i>8, (iy 










4:» Ar iti Vict. !•. til. (Hillti oj Kxrlmnne Act, ISW) contiti'icd. 

H. .")!» 

VJ (2) 

s. til 
». (>3 

s. 0(J(1)(L') 

s. 67 

g. G8(l) ... 

(3) ... 

(5) ... 
«. 69 


«. 72 

ss. 73—82 

8.74(1) ... 

(2) ... 

(3) ... 

ss. 70—78 


a. 81 
8. 82 

s. 84 
e. 85 
s. 8U 


9. b7 



8. 88 
3. 89 


.. 339 

.{39, 34l,:t4;{ 

J39, 343 

.. :!.■>(• 

. . 345 

, . 

.. 344 

.. 314 

.. 314 

.. 317 

. . 335 


.. 343 

.. 343 

.. 343 

.. 320 

... 320 

.. .340 

, . 

.. 347 

.. 3i)0 

.. 350 



. 351 


... 352 

... 361 

, , 

... 352 

, , 

... 352 

. , 

.. 352 

353, 354 

.. 357 

, , 

... 358 

, , 

... 358 

... 358 

... 358 

. , 

... 358 

... 358 

... 358 

... 358 

... 357 

, , 

.. 369 

, , 

.. 359 

, , 

.. 359 





^r.Al.iVi.f ,. r,| (Ii.ll.,..fKx..h,.„,. AC. IHS-.) a,n, erf/*"" 

•; :j-'j 

"■;'•' :n7.:m 

:! •• ^^» 

•' Mi4 

"•'•"-) 30fl 

(•I)''!) 3„4 

Kchi'i ,,,., 

'•7.".. (MfrifJ \','.,ni.iiM l'i(.|Mity Acf. iMsi') 

40, »JJ 

"• I (0 


8. II 

Sf». 14. Ift 

8. l!» 

(The Bankrupt.v Art. I8S3) 
»■ 122 .. 

«• 145 ••• 

(Kpvenuo Act, 18s.t), s, 17 

(I'iitents. Designs, uod Tradt- Mark*' 

Act, 188.'{) ... (!(»7 iit\H All 

4!i & 5.) \-,ct. n. 48. (.Medical Act, 1880). «. « ' IJ 

.MJ & 51 Viet. c. 28. (Merchandise Marks Act, 1887) . . '. tJlJ, fil.-j 

* " ' * ' • • 2ftft 

-'. t ri; y*"*- " ''^'''*- < '^''''''*-^ *"•' ^''"'»' Traffic Act, 1888) .■.■." 42(5 
•>- X- ...? \ ict. 0. 4.-.. (Factors Act, 188l>) 141, l,-^. 15<), 2o0, 472 

n; .V 17 \'ict. (• 

c. r»7. 


.152, 35.-J 

H. 1 



(5) ... 

B. 2 





M. 3 

H. 4 

« s 

p. 6 

s. 7 ", 

.s. S 

8. !t 

B3. 10, 12, I.J 

c. 4H. (Arbitratiuu Act, IHSft)— 
s. 1 

. 141 

... 141 

... 143 

... 141 

... 251 

... 142 

... 142 

... 142 

... 141 

... 142 

... 143 

... 14;{ 

.. 142 

... 143 

1 14, 2,'iO 

... 144 

... 592 



i>2 & f»:i Vi«:t. c. 4!t. 

(Arhilrulion Ait, lHm)—contt7tutd. 

H. r> 

«. 7(1.) . 

». It 

B. 10 

t. 11 


■. 12 

8. 13 

«. 14 




8. It) 

8. 1!) 

« 22 



Schod. I. 

r '■ . 


5;i Si 64 Vict. c. :i 





8. :\ 


B. 7 



BH. Hi, 11 

B. 12 

8. 13 

fl. 14(1) 


B. 17(1) 



8. IH 

B. 19 

B. 20 (1) 


8. 22 

fl. 23 

B. 24 (1) 


., bW 




.W7, 690 




689. 692 










589, 5!t3, 697, 699 
,38 on 






169, 170 












172, 470 








I'AiJLi': <»i' siAii'ii.s ( iriii* 

r.:! .^• 


61 & 

■' \ ViM. c. 3!». 

(Partncisliii) Ai't, IS'.Mt) loniinuid. 


... i7!t 


... I7!l 


... i7;» 



... 178 
... 178 


... 17s 


... 17S 


... J7!J 


... 178 

^. ii<i(l) 

... 18!) 


... 18!J 


... 177 

s. 2S 

... 180 

s, 2l> 

... 180 

s. .'i(» 

... 180 

M. 31 

... 180 

s. ;t2 (a) 

... 190 


... 190 


... 189 


... 189 


... 189 


... 1!K) 

s. 35(a) 

... 190 


... HK) 


... 191 


... 191 


... 191 


... 191 


... 175 


... 175 


... 175 

s. 37 

... 181 

a. 38 

... 187 

8 3U 

... 181 

s. 4U 

... 183 


... 181 


... 184 


... 184 


... 182 

c. (54. 

(Directord' LiabUity Act, 1890) ... 

... 104 

i Vict. c. 13. 

(MerchandiB© Marks Act, 1891) ... 


0. 31). 

(Stamp Act, 1S!H) 

... 532 

8 1 

... 590 




... 5'JO 

... :{5« 

. . 440 

. . . 42! I 

. . . :{;J4 

5, :ni) 

... :{7ti 

.. :j99 

... (iS 

334, 429 

(Betting and Loans (Infants) Act, 1892) 33 

(Gaming Act, 1892) 29,135 

(Customs and Inland Revenue Act, 1893) 532 

(Tmstce Act, 1893), s. 20 04 

c. 03. (Married Womon.s TroiK-rty Aft, 1893) ... 40 

8. 1 41 

c. 71. 

.54 & 55 Vict. 0. 39. (Stamp Act, IS0\)— continued. 


s. 38 

B. 40 


«. 9(» 

H. 93 


s. 90 

88. 101-103 

8ched. I. 

r,r, & r,(i Vict, c 4. 
c. 9. 
tAi Vict. c. 7 
.".( *. 57 \'ict. c. 53 

iale of (Joods Art, 

1893) 240, 





8 1(1) 







s. 2 



B. 3. 


, . , 


8. 4 

... 5,tl,'. 

,11,119, 155. 15S- 





8. 5 






S.S. 8, 9 


8. 10 



8. 11 (1) 

(b) ;. 




8. 12(1) 




.. . 




K. 13 


8. 14 

. . . 










• . . ... 

• >• 







.. . 

. . • 





XXI v 




(i tV r>'i \'ict. < 

. 71. (S.ilo of Goods Act, l»'.):i)~coiiliittud. 

s. If, 


H. 17(1) 


s. IS 

-Sii. 2S7. 2S(), 2!K) 


f>. I'J 






.-. ;:<; 

. . ... ... ... 


s. 2! 

... ... ... . . , 



... ... . . , . , . 




s. 22 


R. -S.i 


P. 24(1) 


s. 25 (1) 




s. 27 

... ... ... ... 


s. 28 



a 2'.i (1) 

... ... ... ... 





... ... ... ... 



... ... ... , , , 


s. ;i(i 


s. :ii (1) 

... ... ... ... 




, 270 

H. :!2 ( 1 ) 

... ... ... ... 






9. :i:5 


><. -M 


s. .>.■) 


'^. :!(i 


s. :{7 


8. ;!8 (1) 




.•^. -M ( 1 ) 




s. 41 


s. 42 


6. 4:5 


8. 44 


8. 4r, (1) 



... ... ... ... 



... ... ... ... 








5i> & 57 Vict. C 71. (Sale uf CJoodd Act, 18'J3) — coiUinued. 

8. 45 (li) 

(7) ... 

8. 4ti 
i. 47 

s. 4H(I) ... 

(2) ... 

W ... 

(4) ... 

«. 1!)(1) ... 

(2) ... 
fi. 50 

(1) ... 
«..-)! (1)(2)(3) 

s. :)2 

8. u:j (2) ... 


8. f)& 

s. 58 
B (52 


57 & 58 Vict. c. 00. (MercliaiU Shipping Act, 1894) 




s. ti 




8. 10 

ss. IJ, 14, 15, 18,20,21 

8. ^1) 

SS. 27, 28. 

8 31 

s. 33 
3. 34 
8. 3o 
8. 37 
8. 40 
8 41 

















2ti4, 209 


240, 250, 253, 25tt, 203, 277 


421, 435, 
490, 497 
... 491 
... 492 
... 491 
... 491 
... 491 
... 491 
... 491 
... 492 
... 493 
493, 497 
... 493 
... 494 
... 4')4 
... 196 


... 4(14 
... 404 
... 405 
... 496 
... 495 
... 496 







T)? X- .>H \ u t. c. »iU. 

(.MiicliantShiipiiiR Act, 18!M)- 




SH. 4:}, 44 


8 4ii 



a. 47 

. . . 



B. f.<> 

. . . 



B. r.7 



B. ;V.» 

B. ii:j 

.s. 114 






8. 120 


s. 124 


S8. 127, 120 

. . 


88. 131— 1:{4 


8. i;{o 


f>. 15,-) 


s. 15ti 

50«i, 515 

8. 157 


a. 158 


S. I'f'J 




8. 104 




88. 108 et ifq. 


B8. 221.225 




8. 2:j!t 


8. 458 

498. 509 

s. 4SI 


*.. 483(1) (c) 


ss. 4<.t2— 501 




s. 502 


B. .-)<)3 


(3) . 


s. 005 


f. 721 








nit .t till \icf. c. 25. 

(Fnendly ISocictiea Act, 1800), 8. 

35 ... 570 

i c. 44. 

(Truck Act, 1800) 



c. 4.''.. 

(Stannaries Court Abolition Act, 


s. 3 

. . 


TABLE OK .S'lAll TES ('ITE1>. 


(.J iV t.;j \ Kt. I. !>. (l''inaiue Act, IS!t<,») 

c. 2;{. (Anchors and Chain Cablca Act. IS'.M)), 


(.Mcniiaiit Shi[ipiiif.' (Liahihty of .Ship 
owners and olhirs) Act, I'.MK)), s. 1 .. 
,51. ( Money Lenders Act, 1 tXKI ) 

8. 1 


(.:{ >S: (it Vict. f. :v2 

I Krlw. 




2 Kdw. 




:t Kdw 




u Kilw 




») Edw 
















:u», 70 


,. 72 

R. -J 71.72 

fl. ti 70 

(I nance Act, 1001), a. 11 :57'.t 

(Musical (Summary Proceeding) Copy- 
right Act, 1902) tii:5. 018 

(Uevcniio Act, Iito:$). 9. B 379 

(Trade Marks Act, l!»05) (i07, t«0«, (Hi!). C.IO. 


9. 11 (ilO 

(Bills of Exchange (Crossed Ciiequcs) Act, 

moil) ... 351 

(Revenue Act, l!tO(l), 3. 5t)7 

(t'ertiliscr.s and Feeding Sttifis Act, 

l'.m>), 8. 1 

(Prevention of Corruption Act, 100(1) 
(Musical Copyright Act, 190(1) 
(Marine Insurance Act, lOOti) 

8. 1 




8. 4 

8. ii 


s. 7 






9 15 
a. It; 


« 17 

... 270 

... 129 


371, 370 

... 371 

... 371 

... 373 

... 373 

... .374 

... 373 

. . . 373 

... 373 

... 373 

. . . 373 

. . . 374 

... 374 

... 374 

... 373 

... 373 

... 374 

... 308 

... 405 

. . . 405 

... 375 




I) Kdvi. 7, f. 41. 

(Miirim liisuiaiicc Act, 
B. 18 



B. lit 

• ... 


i> 1 



H. " 1 




s. U4 

s. -J.". 


I. *>i*. 


8. Jn 

J *>•? 

378, 380 

S. Mi 

8. 28 



... 377 

8. 32 (2) (a) 






• . ■ 

... 398 

». 33 

... 409 



s. 3.-. 


... 410 


... 412 

8. 37 











... 411 

(')) ... 

... 411 

8. 4U 




8. 42 







... 385 


... 385 

g. 4t) 





... 385 

s. 49 

... 384, 385 

B. W) 

... 372 

8. i)l 


b, J3(I) 



... Jo7 


«. 54 

.. 394 

8, 55 

.-. 400 



i:.lw. 7, c. 41. 

(Marine Jiisurance Act, 

t. 57(1) 

B. (KXl) 

(2)(i.) ... 

(ii.) ... 

8. »i2(l) 








B. 63 


B. 64(2) 

B. 65 

B. 60(1) 






s, 07 

s. 08 








B. 73 

8. 71'. (1) 



B. 77 

B. 78(2) 




s. 80(1) 

« 81 




VMi)— continued. 
















































r. Kdw. 7,0. 41. 

(.Maiino liisuruine Ait, I'.MMi)— co«<i««trf. I'ai.k 




s. SI (.•{) (a) 

... 408 


382, 408 


. . . 408 


. . . 408 


. . . 400 

s. Hti ... 

... 381 

b. Ky 

... 378 

Schtil J. ... 3S2, 383, 384 

380, 388, 

38'.», 3!t(», 3"J 

2, 31>r., 405 


(I'radi' Disputes Act, I'JOti)— 

H. 3 

... .^l 

s. 4 

... 51 

s. 5(3) 



(Mircliant .Shi|)])iii^' Aft, J HHi) ... 

. 422 

.s. -'."> 

... 510 


... .MO 

s. 2ti 

. . 510 

b. 27 

, 510 


. .500 

.*. 31 

. . . 500 


... 500 

t;. 33 

. . . 500 

B. 34 

... 510 

s. 3() 

. . . 5oy 

s. 40 ... 

. 510 


... 510 

s. 42 

... 510 


... 510 


... i .U 

H. 47 

... 5.0 

s. 48 

... 5I-! 

H. 4!t 

. . 5i»y 

b. 0(1 

... 401 

s. r>2 

. . . 402 


... 421 

c. :>x 

(W'orkineirs l.'()iii[)eiisatiiiu .Act, 


H. r, (3) 

... 238 

c. 'j:?. 

(Criiuiual Ajipcal Act, 1907), s. (> 

. . . 240 

c. 24. 

(Limited I'aitnerBliips Act, 1U(I7) 

... 107 

s. 4 

. . . 197 

ti. r, 



... 197 

b. 7 

... 198 

s. 8 

... 108 

8. y 

... 198 



7 Kdw. 7, c. ■J4. 


s r.,lvv 7, n. li't. 

(Limited Purtn<'cshi|- .\<t, 

s. lU 

M. la 

M. Iti . 

(I'ittcrun uii<i l>cfii?ns Act, I 



s. 2;) 

(Compaiiifa (Coii-iolidaliou) 

». 1 



s. it 

:- It 

s. i:5 

S. II 

:*. 17(1) 

S. I'.l 

s. 20 

B. 24(1) 


3. 20 


i. 27 

a. :{0 

s. 40 

s. 41 


PAi ■■ R 



d. 42 

H. 4:{ 

ri. 44 

H. 4('! 

s. 4S 
s. 02 
8. 03 

B. M 

«j. 1)5 
a. Uti 
a. 67 
8. 69 
». 70 
B. 72 




W,) 603, tM)4, 

rtor>, iM) 




Aft, 1908) 44. 46. 
162, 199 
103, 199 





203, 204 



























,.. 222 


lAliU: t'l slAII'll-S MIKIi. 


S i;dw. 7, c »••). 

(('oiniiaiiifB (('imKolidiiliia) Act. IlHtS) 

~ tiiiitiiiiiiil. 

B. 7;t 


>. 7.'> 


s. 77 


f. W)(2) 


R. SI 


K. Si: 


H. 8-t 

lot, lor), 205 

B. 8". 


H. S7 


8. W(l)(l') 


8. 8y 


B. in 


8. !t2 


B. <>:5 




8. ItHf 


e. 107 


B. 112 

21!», 221 

H. ii:5(i) 






H. lit 


B. 120 


B. 121 




s. 121 


8. 12'J 


B. 130 


8. 137 


B. 140 


B. 142 


B. Mi") 


B. 147 


P. 148 (1) 




6. 119 (:})((•) .. 










s. 161 


s. 162 


(l)(b) .. 





-i r: Imt. 7, c. 03 


oinpaniea (CoMolidation) Act, 1908) 

— continued. 

n ir.2(2) 


8. 15t ... 

, . 

.. 23ti 

». ... 

.. 235 

8. i:.7 ... 

.. 239 


.. 240 

9. I.-.H ... 

.. 235 

8. 15i) . . 

.. 230 

.s. MMt 

.. 229 

a. ItU 

.. 229 

8. lti:{ .. 

. . 230 

8. Kit) 

.. 231 

8. 171 ... 

. . 237 

B. 182 ... 

.. 240 

8. 183 ... 

.. 240 

8. 184 ... 

.. 241 

8. 18(i (i.) 

.. 241 


.. 241 


.. 241 


.. 241 

8. 188 ... 

.. 212 

8. 191 ... 

... 245 

s. 1!)2 ... 

241, 244 

8. I!)3 ... 

... 212 

8. 101 ... 

.. 242 

8. 195 ... 

.. 243 

8. I9<i ... 

.. 242 

8. 199 ... 

.. 243 

3.205 ... 

.. 241 

9.207 ... 

.. 231 

8.209 ... 


8.211 ... 

... 238 

8.212 ... 

.. 210 

9.214 ... 

.. 245 

(1) ... . 

.. 232 

3. 215 ... 

.. 219 

8.219 ... 

.. 235 

s. 223 ... 

.. 243 

s. 224(1 )-(3) . 

.. 236 


.. 236 

-.268 ... 

,. 200 

8.274 ... 

.. 208 

9. 275 ... 

.. 20,S 

.Sched. I. 

.. 203 





'•• Kdw. 7. 

. iii. 

(Marine In»iiranrr ((Jatnl)lin(; To 


Alt. I!t0< 



, Id Kdu. 7, 

«•. s. 

(Finnrrp (llMtU-IO) Act, MtiO) ... 


\ \ •2( k«. 

5. <•. (i. 

'IVrjnrv Art, 

N. 1 



c. :n. 


MarkK Act, 1911) ... 


c. an. 

(Muni'v lenders Act, 1911) 


s. r 


H. 2 


r. I«. 

(Copy right A( 
«. 11 

t. 1911) 


61 r. 

(• iK 

(Finance Act, 



•'« fi, 4 ( ipO. 

:.. <■. 2r). 

(<'i)mpanics A 
f". 1 (I) . 
CJ) . 

ct. 191.3)— 


1 .^ .". doe. 

.-.. ( . 1 ». 

(('urn ncv and Bank Xfitcn Act. 1914)— 

s. 1 (1) ... 

... ... ... 

■ . . 


<■. 17. 

(Deeds of Airanyement Act, 1014) 



<•. 5!». 


H. 1 

(«) ... 
s. 2 
«. 1 

(d) ... 
»...-. (I) .. 

(2) ... 

(7) ... 

Aft, 1914) 



p. ti 


12) ... 


H. 7 


s. 8 



*■. 10 

!>. 1.3 

8. 14 

(:{) ... 
s. i.-i 

(10) ... 
s. Hi 

m ■■■ 







t iV .'» ( Jco. ">, o r>i>. 

(lUiikniptrv Act. 1011)- 

.1. 18 











(2) (I.) 


8. 25 
a. 2A 



s. 2S 

s. 2'.» 

3. ;j<t 



(1) ■•• 






... 470 

... S4)( 

... .w« 

. . . r»«Mi 

... 5»Mi 

. . . 5«r. 

... SILI 

... iVtt 

. . . 5«!» 

. . , WIH 

... 5«2 
.V»»», 517 

... fiWi 

... 5«:t 

... 6(« 

... .W3 

. . . mw 

... 503 

... 555 

. . . 547 

... 548 

... 548 

... 550 

. . . 550 

... 470 

... 54ti 

... 547 

... 47 

... 580 

... 580 

... 57!> 

... 579 

... 579 

... 579 

... .->79 

... 580 
57rt. 577 

... 577 

... 57« 

... 191 

... 577 

... 577 

... 57(i 



4 & .» Cec i), c. .>'.!. 

(iJaiikruplcy Act, l'JU)—ajntiiui,.U. 
8. .•!5 (1) 

s. ati 

8. :j7 "!^ ^'^ 

8. ;{s 




s. ;{!) 

a. 4(» 

W '.'.'. 

s.ll ... 

«. 41' 




s. 43 







s. 50 

«-^J(l) '..'. ['.[ 



8. 54 

























.. 578 
... 5SI 
... 551 
47, 550 
... 653 
. . 55;j 
... 553 
... 652 
... 557 
. . . 557 
... 557 
... 5.-)8 
... 55!l 
. . . 550 
... 550 
. . . 550 
... 502 
... 502 
■ . . 552 
. . . 652 
... 600 
... 554 
... .554 
. . . 554 
47. 500 
... 570 
... 570 
.. 570 
.. 501 
.. 50 J 
.. 571 
.. 672 
.. 570 

.. «:7y 

.. 010 

.. ..71 

.. 5S1 

.. 564 

1 & ."> < it'u, 5, c. 5'J. ( 




B.irikruptcy Act, li)\i)—conlinued. 

9. 71 

... Ml 


... .-,ti4 

.f. 7 1 

. . .-,1)4 


. . . .-.(!,") 


... or)ri 

s. 77 

. . . ."ilKJ 

■s. '. S . . 



. . . 5(m 

s. • ' ( 1 1 

. . . .-.72 

s. *•■; !i) 

. . .-i74 


... 57t 


... .-)74 


. . . 575 

». S8 

... 572 

s. S!l 

... 57.! 


. . . 572 

.-,. >t2 

. . . 574 

s. !i:t 

... 5t>8 


... 507 

H. '.It 

... .5tl7 


... .-.t>7 


... 507 

b. US 

. 541 

ri !•!» 

.. 541 

3. KHt 

... 541 

s. 107 (4) 

. . . 5:{fi 

s. lOS 

. . . 542 

H. 110 .. 

. . .-.42 

s. Ill 

. . . 542 

.s. 112 

... r,:n; 

s. 115 

... 541 

•s. 119 

. . . 585 

.-i. ll>5 

42, 5.'{4 

s. 12(i 

. . . 5:10 

s. 127 

... l'.»S 

.-. 12'J 

... 580 


. . . 505 

s. 130 

. . . 580 




. . 570 

s. I4:i .. 

. . . 500 

a. 1J4 cl M/] 

. . . 5o<» 

8. loo 

... 47 

B. KS8 

... .UH 



'lAiil.K <)]• STATITES riTEl). 


4 & f (;((.. ;,, ,-. :,!p. i li.inknipl.v Am, im iy conlmvid. 

- "'' 64() 

>'hc(]. 1. r.4;{, 544, 64,'5 

!'■ r>78, .'")Si,r)82 

ti A- 7 (Jfc). T), I. II. (Mdchaiit iShij.pinc (.'^u!vllf;(•) Act, J;t|(i) 500 
( . .Ml. (I.iimny A<A, iKJtl) — 

■'■'*■' •_>4H 

'■. ."iN. (i;(jii..<tiiitujn (if Biisintss Names Act, 

'!•"') :!<»,! tiT.t.' Id 

''■'i JtiT 

"•'■' ]fi7 

'^^ '"^ .-{O, lti7 

*<• ^^ 1(18 

7 .V s «,((>. .i, , . |,s. (Ciiiiijjjmic- (Konipi JnUrcst.s Act, I!tl7) 204 

•^■-(1) I'JO 

c. 2.S. (Coitiiiaiiics (l'aiticiil,ir.s a.-^ to ])incl(ii>) 

Act, IlilT) :.()s, 2KI 

c 4S. ({'.ills (if IJxcliMiiizc (Time df X(.)iiil') Act, 


''•1 :(:h 



A.ii. Ill's Itccfn i: Twiss ... 101 

A^iiiiit an<I Co. v. Wobey ... 257 

AliK y r. Cru.v 348 

Adam r. Ncwbigrjing ... lO.'J 

.\'l.iiu-i r. Lindscil ... ... KJ 

A'iitn-iiin, Er parte ... ... 1!K{ 

.\'Mi>iiu c. (raudaseijui ... 140 
.\iirniralty Coinini.ssioncrs v. 

i'w 506 

.Vl'ius v. Great Wi'.stcin t'ol- 

liiry (_'o ... 271 

.\iiiy r. liorhaiu ... ... 17^ 

.\lal., r. Harness ... 2t) 
Al( .'.aiider v. Automatic Tele- 
phone Co ... 217 

r. «izer :}K{ 

Alli II r. Flood ^<). ',1 

- - *■. (Hild Iteefs Co. ... 204 
AIIkoii ,.. HrLstol Marine 

lu>iiraiiic Co. ... ... 44,s 

Mliiiitt »'. Aslictidfu ... 4.-,8 

\lMt'e r. Altrco 4HI 

\iii.dL;.uiiated Syiidirati', Hi 20L 
\ii'iMan I'lnnrcr J.cather 

' 'I . Ill ... 225 

Alum. .Ilia Soda Co. v. Cliaiu- 

Ixilaiii ... ... ... 214 

\ii.tiiscii I'. Marten ... :i<f2 

\i..l.'M.,ii i: liadeliHc ... 20 

'•■ I'ayiier 510 

\ii.|i. !.■ )-. Zine Mines of 

'Jiiat Britain ... ... 207 

■'•''■• -v-i f'. Ga.-i Muter Co. ... 204 

— )'. Mockford ...98,99 

t'. Ramsay Hnd Co. 128 


Anyi'l ('. Jay 102 

Anj^lo-E^^yptianCo./:. Rennio 288 

AppleWy )'. Myers 78 

Arkwriijht v. Xewbolcl ... 00 

Armitage r. In.solo 2'") 

Armstrong v. Jaekson 102, 103 

V. .Stokes ... 150 

Arnold r. Cheque Bank ... :{.'')0 

Arthur «'. Barton 4!»!( 

Arundell v. Bell 195 

Ascher.son v. Tredegar Dry 

Dock, etc. Co. ... ... 401 

Ashijury Railway Carriage 

and Iron Co. v. Richc 44, 12t>. 

.Ashley v. A.shley ;{05 

Ashton & Co. V. I.Kindon «fe 

North Western Rail. Co.... 421 
A.s.sieurezioni Gencrali de 
Trieste v. impress Assur- 
ance Corporation ... ,'J'.)8 
-Associated Oil (Carriers, Ltd. 

v. Cnion Insurance 8o{'icty 1575 

Aston V. Kelsey ... ... 527 

-Atkinson v. Bell 255 

Atwood I'. Maude 183 

Augmtn, The 504 

-Austen v. Boys 195 

Austin Friars S.8. Co. c. 

Spillers & Bakers, Ltd. ... 452 
Austin Friars Steam Ship- 
ping C'o. V. Struck ... 513 

Bade ley r. 


I««, 170, 401 




.■>.-> I 






iiiiKol r. Millir 
Hailcy »'. Tliurstoii ... 
Baily f. He ('rtsi>i>^ny 

Haiiil's ('as(! 

iJivkiT I'. ( '<t\ii'ii.i;i' .111(1 (.' 

r. Diiiiny 

V HcfliZf'coi'k... 

lial.luy r. Tarkor 2W 

HaliJwin r. I.miilon, Cliat- 

tiaiil. and Dover Rail. C'i>. -11" 

Ball V. l)mi.-<teivi!lo 11 H 

BaliiKiral Co. (S.S.) r. Marten :Wii 
Uaiuford i: iioole and Slu-f- 

(ifld TraiiHjioit Cu. ... 41.'> 

I'.iiiliurv r. Hank of .Montreal 


B.ird; Line. Ltd. r. Capel 

(.\rtliii!) \ to 

l!.ink of LnL:l:uid r. Cutl.r 


r. N'ajiliano 


■MM. :i:ji 

liank of Ireland f. Ev.uis' 
'rrvistee.s ... 

Hankart i: JJowers 

Banaatyne v. Marlver 
Iiarl)(T V. Meyerslein 
Barclay v. Stirlinix . 
Baring v. Ccirrit' 
ISarker v. FiuI'iml: 

V. .liUL-^on 

Barnes ?'. 'I'oye 
Barrell v. Triissell 





I .■.•_> 


... 4(t:{ 

1.53, I.-).-) 

... 1.-)!) 

... :5st'. 

. . . 4.').-. 

. . 4U4 

Barrett i'. Deare 

Barrv v. Croskey 

Bartiott V. Pent land 

]5arwick v. Knirli.'ih -loint 
Stock Bank 

Bastablo, In re 

Batoamn r. Finder ... 

Bath V. Standard I^and Co., 

Batson r. Donovan 

BaumwoU v. Furncss 420, 441. 44.'{ 

Bavins v London and South- 
western Bank ... SO' 

Baxendale v. Cireat Latiein 
Rail. Co 

Ba.vter (■ Burfield 

T5avliB V. Dinelev 







Ba/.eleV ('. Folder 118 

Beal y. South Devon Roil. Co. 125 
Beniiehani|j v. l'o\vle\ .. 125 

___ (Farhr. ... lO'.t 

Beehervaise i: Lewi> ... 328 

Beelnianaland, etc. to. ». 
Ixjndon TnuliTHi Bank 2! •7, .305 

l'>eek V. K\aii« 'tl'7 

I'. Pierce ... ••■ -^S 

Becker, Gray & ''■>. r. London 

Assurance Corporation 'MO, 399 
Beckett t;. Addynian ... 4<)9 

V. Tower .Assets ... 47t> 

P.iddow «'. Beddow 593 

Behiend's Trust. Ji" ... 5.">2 

BeltMst l!o|H\Vork Co. r. 

Buslicll ^1-* 

B.ll i\ B.ills 9 

Bellerby r. Rowland and 
.Marwood's Co. ... •.■ 211 

Belt f. Balls l/>8 

Benjamin v. Barnett 525, 52t) 

Bennett, /« rf I'JJ 

(.. White 54 

Bentall v. Burn 257 

Bcntinck v. Fenn 12<> 

Bent ley r. Craven 180 

Bentsen v. Taylor \, Sons ... 431 
Bet helU. Clark ... 279, 282 

I'.ctts. In re ">■*'! 

t... (iihbins 133 

Be van V. Webb 1"9 

Bidder r. Bridges 19 

Bill.ii- r. Luiiiley 107 

Bill)oro\iuh r. lloliues .. 172 

Bird V. Boulter 158 

Birkmvr v. Darnell . . 45() 

Bishop V. Shillito 290 

Black V. Ottoman Bank ... 4t)8 

— — V. Williams 497 

Blackburn v. Haslam ... 37<> 

t'. Vigors 103, 376 

Blackburn, etc. Buildinj; 
Society v. Cunliffe, Brooks 

and Co 152 

Blaikie r. Stembridge ... 432 

Blair v. Bromley 17ii 

Open Hearth Furnace 

Co.,Ltd.,i?e 207 

Blakeloy r>. Mulkr .. .. 9i 

Blakeley Ordnance Co., In re 33, .34 




... <i8 

... 500 

... 25»i 

•_>.■)",), 278 

... 4t>7 

Hli: "V r. Ilciidricks 
IMai! iianl. J n re 

i'.lriikinsdii i>. Clayton 

lllnMUIl ('. SillultTS ... 

I'.o.iliT r. Mayor 

l'.o(iriiliiiiii r. I'liichati 
lioiit liitaitiKjIt, The 
linliilio iiiiii Co., Ltd. r. 


B(ilivia'(Kci>ii'>liL) I'- liuk'iu- 
iiity .Mutual >' irine A.ssur- 
aiKL- Co 
Hoiivia (llfj.ublic) Kx|>lor:v- 
tion .SyiiilicatL', Ltd., lie 

l'.olioii tJ. Madden 

|{.ill..n I'.iitneis v. Laiubcrt 

13, 121 
B.mdiini lA'i^nind & Co. v. 


Ilnmiard v. Uott 

r„,.illi .s.S. Co.. Ltd. f. CiUfio 

I'li-rl lion Co. 
r...tiifs c. lni|MMiai Ottoman 


I'.oiiowuian i: Drayton 
l'..istork and Co.. Ltd. r. 
.\i. hul.'^on and Sons, Ltd. 272. 


r.oston Deep St-a i-'isliing 

( o. i: Aust'll 
i'.o.ston Fruit Co. r. Hritish 

.Marint' Insurance Co. 
l'.oiiini». In re 
IJoyd r. Duljois 
iMivdrll r. Drummond 
I'.i.uilord Old Bank r. Sut- 


Hradlaui:li i. Do Rin 

)'. Newdej'ate 













Bradley v. Ncwsum (H.) Sons 
& Co 

Hradv *'. Todd 

\UM, lie 

I'ranckelow Steamship Co. 
i: Lamport & Holt 

I'.randao v. Barnett 

Brandon, £j; parte ... 

r. Ne-nbitt 

Brandon Hill, Ltd. v. Lone 481 

Brandts (William) v. Dunlop 
Uuljber<!o. ... •■• ^-^ 





Breay ''. Royal British 
Nurses' Association 

j?rcttel v. Williams 

Briddon v. (ireat Northern 

Hail. Co 

Bridj;c8 r. Berry 

. V. (Jarrett . • ■ 

Brind r. Dale 

Brindley, lie 

Brinsniead (T.E.) and Sons, 


Bristol Corporation r. Aird 

{.lolui) & Co. 
Bristol Tramways i. Fiat 

Motors ... 

British and Foreign Marine 
Insurance Co. f. Sanday & 

Co. 389, 402 

British Cash and Parcel Con- 
veyors Lamson v. Store 
Servii'e Co. ... •■ •-" 

British Dominions Ceneral 
Insurance Co. r. Duder ... 
British Elec' ric, 
etc. Co. t'. Underground 
Flectric Rails 80, 5'.>0, 

Broeklesby r. Tem})eranoe 

Building Society 

Broaden v. Metroiiolitan RaiL 
Co »3,L'i 







Bromley v. Smith 

Bromwieh ti. Lloyd 
Brond «•. Broomhall 
Brown v. British Abrasive 

Wheel Co. 

Brown r. Llandovery Terra 

Cotta Co,, Ltd 

Browne v. La Trinidad . . 

Bryant, In re 

r. Richardson 

Budgett, yJc 

/:. Biniiington 

Bull's Coal .Mhiing Co. v. 

Osborne ... 
Burbridge i-. Manners 

Burdett, In re 

Bushel r. Wheeler 

Button. In re 

Byrne v. Schiller 

r. Van Tienhoven ... 



















r AC : i; 

LV.l, I'St 

Calcutta Co. r. I)e Mattos 287 

291, 2<I2 

C.uilwnll c. Ball 43!t 

(.'anieron i'. Smith ... ... <>S 

Cannan r. IJryoe ... ... 22 

V. Wood ... ... 01 

Capital and Couiitie.s Bank r. 

(iordoii ... ... ... 'iXi 

Card )'. Hope 4!I8 

Carlill i: Carlxilio iSiuokc 

Hall Co. ... 12, i:{, 14, JS 

Carlton Steamship Co. r. 

Castle Mail Pafkets Co. ... 4:{o 

Curnell v. HaTi.'-on 
<.'iirtcr r. Bocliiri 

V. White 

... :};{ 

... 301, 

:!<;;{, 375 
30!», 407 
... 501 

.ind Ellis, /» TP 

and Kenderdine's Con- 
tract, In re 558 

Cassel r. Inglis ... ... 5J7 

Castcllain r. Priston ... 302, 
303, 308, 370 

Castle n Playford 292 

Caxtlegatf, The 501 

Caswell r. Cheshire Lines 



Cathnj. Bell ... 131, 


(^iton r. Caton 


Catterall r. Hindle 


( 'ave r. Hastin^is 


<Viitral Venezuelii Rail. Co. 

!. Kisuh 100 


Chadburn «'. Moore 


Chalier. York (Duke) 


( 'halmers. Ex jMrtu 


Chami)ion r. Plumnier 


(Jhandler )■. Webster 


Chaplin v. Hicks 


Chapman r. (ireat Western 

Kail. Co. ... 


V. Shepherd 


('harini,' Cross Bank. In re ... 


Charlesworth r. Mills 


Chasemore v. Turner . . . S 


('heeenian i'. Exall 


« heiiy '■. H<>niin{: 



Chippendale, A'j- /w/W' ... I7i* 

r Holt 307 

Christie c. (irig^s ... ... 413 

Chiiruli r. Imperial Clas l-iiiht 

Co. 45 

Chnrehill (Lord), /« re ... 402 
('burton r. Douglas ... 195 

< 'ito. The 447 

City Discount (Jo. i-'. Meljean 

05, 00 



, 475 



.. 45 

.. 200 

.. 323 

,. 28S 

. 254 

04, 00, 


.. 176 

.. 483 

(Uui Suthtrland, The 

Clark, /?e 

V. Balm, Hill and Co. ... 

Clarke v. Army, etc. Soeiety 

— V. Birley 

t', Cucktield Union ... 

)'. Hutchins ... 

V. Shee 

i\ Spencc 

Clay V. Yate.H 
Clayton's Case 





Cleather I'. Twisden... 

Cleaver, In re 

— t'. Mutual Reserve 

Life Assurance Co. 
Clemens (E.) Horst Co. v. 

Bidden Bros 

Clements r. London and 

North-Western Rail. Co. 
Clink f. Radford ... 435,437 
CUouph r. London and North- 
Western Rail. Co. 

r. Samuel ... 510, 

Clutton V. Attenborough 
Clydebank, etc. Co. r. Don 

.lose Yzquierdoy Castaneda 79 

Coates r. Railton 283 

Cochrane c. Entwistln . . . 482 
(?ocks V. Mastcrman . . . 356 

Coggs ?-. Bernard ... 125,413, 
410, 471, 472 
Cointat »'. Myham ... 269,273 
Cole V North-Western Bank 154 

Coles «. Bristowe 518 

t'. Pack 458 

J-. TreeotUick - , 1 3 M 58 

Collen r. Wright 140 

Collingridge v. Royal Ex- 

change Assurance Corpora- 
tion ... 




Colliud '•. Martin 

Colonial Brtnk v. (Jaciy 

f oinmercial }<ank of South 

Australia, lU. 
('oinniert'ial Batik ot Tasi- 

mania r. Jones 
<'niuim;nial Steamship <'o. 

r. lioutloii 
( ijinrn'tiMxallL, Tin' 
(Joinpania Naviora Vascou- 

zaila f. Churcliill 

ConilunH (^larry tlo. r. 


( 'oasolidated (Jo. c. Curtis 

and Son ... 
Consolidated Credit Corpora- 
tion ('■ (losney 
Consolidated South Rand 

.Mines. Ltd., lie 

Consolidateii Tea, etc. i'.o. 

V. Olive r'ij Wharf ... 
t'uiiMaiUm, The 
('oaway c. Wado 
Cook V. Lister 

(Jooke V. Eshelby 

Cooper V. Kendall ... 

J,. Metropolitan Board 

of Worka 

c. Phibba 

( 'ojje V. llowlanda 
Corbett, Ex parte 

Corn V. Matthews 

Cornelius /'. Phillips 

Corpe I'. Overton 

Cort V. Ainbergato Rail. Co. 

Cory J. Burr... 

(.'. Thames Iron Work.s 


Cossiuan V. West 
Cotnam i\ Brougham 
Cotton r. Coodwin ... 
Coiilson, />x ;)artc ... 42 

(■oulthart 1'. Clemontson ... 
Coundell V. London and 

Westminster Loan Go. . . . 
Couturier v. Hastie ... 89, 

Cowasjoe I'. Thompson 

Cowell v. Simpaoa 

Cowern u. Niold 

(Jo.K ;;. Hickman 

Coxhead V. Mullis 



























VjiMi; Inrr 4»)'.t, 470 

('rauipton and Holt v. Ridloy 

and Co •;•»" 

Crane and S(jtis i: Ormerod 2.52 

Cranle y ''. Hillary 57 

Crears c. Hunter .. IS, 455 

Croft r. Lumley 61,t)4 

('rook ('. Morley ... ■ •'>40 

Crossley ('. .Mayeock .. 13 

(,'rouan '•. Stanior ... ... 393 

Croueh (' Creat WostPrn 

Rad. C'u. ... 

Crowley's Claim 

Cruttwell ('. Lyi^ 

Cullwiik, It'' 

Cumber v. Wane 

( iiiditfe Brooks and Co. r. 

Blackburn, etc. Building 

f'url Brothers, l-til. r. 

Webster ... 
('urrie r. Booth 

/'. .Misa 

Curtice r. London City and 

Midland Bank 

(Jutler '■. North London Rail. 


Cutter ''. Powell 


I. -.J 






M, 7S 


Dahl r. Nelson 

Daintrev, In re 

Dakin (H.) & Co., Ltd. v. Tx>o 

Dalby r. India and London 

Life Assurance Co. 
Daniel *-'. Rogers 
Daniel' . Sinclair .. . 
Darnei . v. Harris . . 
Darling r. Racburn 
Davidson /•. Carlton 





477, 484 
Davies v. Humphries ... 463 

V. Jenkins . . .478, 483. 484 

V. London and Pro- 
vincial Marino 
lasuranee Co. ... 459 

■ — r. Rees 484 

Davis V. Davia ... ... 166 

V. Howard ... '■>28 



j)ii\i> /. n.iiiv ij- 

J)avisiili /. l)iinHl»l»oi» ... I'>" 

hiivys <•. I'liMWcll ... .. '•"'" 
|);i\\.-*i'H I. lire Ml Ni'HIkim 

.111(1 • itv l!iiil t'ci. ... ."i.i 

Da;. -. .Mrl.cii "'I 

" - /•. U'dolwii li K'|iiilaMi- 

I'.iiildint: Si.ciity .. '''.! 

1)< Kussilii- I. Alt i;>" 

l)c J"raiui.'<(<i r. llatiiinii ■■ :'•"• 

I)., llalin I. llaithy It'll, 110 

!><■ MattoH r. r.ciiiainiii -i> 

J)(liriilian) r. Mclldii Hit' 

l)ci>t(ir, A , Hi (ii^'.is) ... r.:!.-. 

, A., /.V (I'.m.-.) .Viti 

, A.. ;.*( (I'.»i:i) t<i7 

l)fcr'ii.\ r. .Meyer ... . ■ ;>IS 
J)celey ). Lloyd's Kaiik ... ''"'i 
Deiiloii r. (;reat Xoillieni 

Kuil. Co 1- 

1). lint; '•• WiiKhelsea ( 4li;5 
])ein r. IVok ... '.17. IW, 

KM, 2<i.") 

Dever, i:.r parte :!»" 

DcviTf^ps c. iSaiicloiiiaii, Llaik 

and Co. 

Dtwar V. .Miritoh 

Jiiinidtiiil, T)i( 
Diekenson v. Dodd' 
lUck.-^on V (ireat Northern 

J^Ml. Co 42:5,42.-. 

DU'drrieliseii r. Farquliarson 428 
])is:t()V(.rer:i' I'inance Cor- 

iioration, lie, Lindlar s 

Case iill 

Dixon f. Baldwen ... 2M. 2S2 





J)rink«.iter c. (.oodwiii ()3, l.-)3, 

1 )ii'<r r. Urnad ... ... If^ 

Diii-lioin (Kred.), l.ld. »■. 
lledeliaktielMilatict 'I'lalis- 

allanlir Ms 

I>iiiiiiinond r. \'an Jnveii •.■ 2liti. 


Muliliu City l>istillery ('«•. '. 

Doliertv" 2.ili 

DiKkuotih. Hi 2;il 

DiiIIk M (. Seott 1«>" 

I >Miiran I . I'lensou ... .. "i" f 

r. |)i\on ■ ■ •>2 

- - r. Hill .. . . I;i4 

Fox aniK o. ,. Norlli 

anil Si>iitli Wales liaidi ... :i27. 


l>mdo|. /•. jli;i;.'ilis I.") 

/. l-anilpcit 2t;(l 

l>uulo|) I'neiiinatie Tyre Co. 

(. New (JataL'e. etc. C W 

l>unn ''. liuekiiall Hnis. ... i:i2 

Diiiiiaru (.Mayor) r. Fowler K.O, 

J)uiliain JSrothers r. Koliert- 

son ... ••. ' 

I »ynainit .\ktienf.»esellseliatt 

r. \\in 'I'into Co. ... ... 11"> 


1-. Clarke 

r. Yates 

Jjohell I. Mevens 

])(je d. (larnons r. Kni;;ht ... 

r, J)onsU)ii 

Dolenian iV Sons v. (l.^.sett 

J)on I . J.iiiiiiiiaiiii 

J>o(^rnian r. ■Iiiikins 

Douclas r. Patriek 

])(j\vdi'n and i'ook, lAd. v. 


Dowlintr r. Betjeuiann 

Uraycott t. Harrison 

Uiew /■. Nunn 









.'■.h:<, r.84 
. . . :m:\ 
... :{(»2 

IS, 4. '.5 
... Xi 

:.A.ii.. //' /■' 

ads /•. Williams 
arle v. P.owrroft .. 
astwood r. Konyon 

hhett's Case 

!( cU'siastieal ( oinmissioners 

r. .M.rrul 4(i 

tlan r. ])ndtield 258 

Idelstein ? . Sebulcr and Co. 21)7, 


i;d;;inj;ton r. Fityinauricc ...1(5, Ji'i 

i:d,riird()linr,Tltc M-i 

Edwards r. Carter 'V\ 

■ r. Marcus ... ... 47!l 

r. SheiTalt ... 4ir> 

Eilbeck, /fc -^77 

Kiev '•. Positive Coverninent 
Seeiiritv T.ife .Assurance Co. 48.4U 







Klle«n,cr. Hrcwcry Co. |;^ ^^.^^ 

( '(i(i[M>r ••• ' "' 

Klli<'tt v. Cruti-liley 
i:ilis c. Km- 

r. I'oiui 

Klinorc- i: Stoii'- 
Klpliinstoue (l-onl) 

land, <'t<-. <'"■ 
Kinaimcl >: Synion ... 
,..,„,,enc... '•. An^'l.-Au.trun 
liank ••• •■• ■■■ 

Kinpnss Knf;ii>.'eiiiip < <>•. 


Kn...U unci Zar.-t/.ky. 1>.k;1v 
au.i (,•...•« ArlMtral.on. /»i 

Tilt J 

Erbnsicr r. New Son.l.rei" 

Phosphate Co. .•• ••■ 

KMkinc Oxcnfoid ancH o. r. 

Ertel I5iehtr ami I 

Tinto Co 

Ksposito V. Bowden... 
Hnroi>ft,The ... 
Evan V. Nichol 
Evana i'. Hoaro 

V. Kobert* 

Evans and Co. v. Heathcot 
Exall" Partridge ... 

i:.nter, The. 

Kvles r. Ellis 

/•. \{\n 


;i.-. 1 











F<Tt?iison t'. Carrinnton 

I'. Fyfp ••• 

,.V, Mu>?nior... • •• 

I'ini- Art Soei.-iy >. Un.on 

liankol London ...%• ■•• 

I'inlay, lt< ■■■ ■" ,, 

pliivys ••■ ■ • * 

I'lrlh, /•-> l^irU • • • ■ • 

[.'Ish^-rr. Eiv.rpool 
Insuianci- I o. .•• 

. r. Smith 

Ei.shinon-iors' Company '• 

Fitz^'ciald c. DrtssU'i 

Flcct i: Murloii 
Flew, lit re ... 
Fli^ihl i: I'oolli 

,. !'.ocd 

Flood c. An. hor Lint- 
FlowtT I'. London an.lNorth- 

VVestfrn Hail. Co. 
Foakcs r. Beer 
Foley r. Hill 
Forbes c. Jackson ..• 
Forget c. Baxter ■■ 

r. Ostigny .■• ■■■ 

FormanamlCo. r.M.ip l-'<l 

desdalc " 

Forst«r '•. Baker 
Fort, Re ■■■ ■ 
Forward v. I'lttavd ... 



Fairlie »■. Fenton .■• 

Falk, Ax F'r/f •• •:• 

Falkingham r. \ K'lonan Kail. 

wav (,'oinmissioncrs 
Farcbroti ^ v. Simjiv.nH ... 
Farmer's Mart, Ltd. r. Mibu 
Farnham, /^c 
Farnsworth r. Carrai'l 
Faiivr (. Lacy 
Fiarnsidc r. Flint .•• 
Feast f. Kobinsou 

Fer.wiek (W. F.) 

155 ' 


Foster V. Charlies ••■ 

V. Dawber 

r. Jolly ••• • 

. ,;. 2<o\v Trinidad, Ltd 

Fowler V. HoUins 



Marino Insurance 



France r. Clarke 
France Fenwick ( 
,i„d Co. r. North oi Eng- 
land, etc. Association ... 
Frazer r. CuthlK^rtson 
Frccth r. Burr ••• ••• 

Frost V. Aylesbury Dairy Co. 

V. Kniglit 

Frvf-Hill ... 
Furlcy r. BiiteH 







. 45t> 
. iH»4 
. 155 
. 584 
. 1«I4 


41 il 








( Jabrifl ami Sons r. ( 'liiin hill 

iiiil Situ . . |:j| 

I 'iicld '. M<Mii.'litjiii . 14,') 

r. Thiim|>s()n ... . ;("> 

(.'alloway V. Scliill, Sfcliolmi 

audCo. ... Jilt 

(Jardiner f. Djivi.s ... ... »>;{ 

( Jardner v. Onjut 2."»7 

(iarncr I'. .Murray ... ... 182 

(I.'irnvnl r. Lewis , . ... ;yr> 

(Jartonr. Uristol atid Kxcter 

Kail. Co 4 

(larwood's Trusts, y« re ... ]«!( 

(ieipil r. I'tac.h I(»t> 

< icnenil Auction, i>t<-. (Jo. r. 

Smith 4t 

( Bill posting C'o. /■. 

.\tkirisori ... ... ... 2r> 

< Ii'iiforsikriiias .^ktiesclkabct 

i\ Da (.'i).-ita ... ... ;}"•) 

< Jeor^o I'. Claijett ... ... 147 

< lilihs r. (iiiiid ... ... SO 

< Jiblrtii i: National, etc. Union GO,;")! 
(liovp, I n re ... 
(Jill /.'. Shepherd and Co. ... 
<;illespie. In, re, Ex -purlc 


(Jillett t'. Hill 

Gilroy v. Price 
Gladstone w. Kii' 2 ... 
Glamorgan Coal (!<>. /;. South 

Wales Miners' Federation 

< ilasscock V. Ralls ... 
Glenio '■ Bruce Smith 

aienlird. The 

Glyn, ^Milltf and Co. v. Kast 

and West India Docks ... 
( iodard i\ (^ray 
(Jodsall r. Boldcro . 
(ioldint* V. Hradlaw . 
GoldsoU r. Goldman 
Goldstrom v. Tallerman 
Good (-•. Chccsman ... 
Goode V. Harrison . . . 
Goodlock ti. Couainy 
Goodson V. Brook* . . . 
(joodwin v. Gray 
V. Robarts 





. 34 
... 252 
... 138 
.. Kil 
... 1'97, 
itU, 3(M1, 350 



Gordon v. Rimmin:.'t..h .. ,18« 

I'. Str«>«t ion 

Gore V. (Sibson 43 

Gorjjier t. .Mi(!ville . ,104 

•ioss c. .\u[>ent (I.onI) H3 
(iiithenbur^ Coiruiiercial Co , 

/" r,'. ;{4<) 

Gould, In n ... ... ... 558 

Grafton t. .Armita^e ... 255 

(Jrant ('. (.'overdaU.' 432 

I'. Gold, ct-c. Syndi- 
cate. Ltd ]2U 

I'. X or way ... 443 

f'ritituduif, Thi: 504 

(i ray don, lie ... ... 5,"i4 

Great Northern Rail. Co. v. 

Behreiis . . 4ii) 

Great Northern Kail. Co. v. 

Swatlicid 417 

Great Northern Co. n. 

Witluim 13 

(ueat Western Kail. Co. i-. 

Buucli ... ... ... 420 

Groat Western Kail. Co. v. 
Loudon and County Kauk- 

i"j; Co ■. ... ,353 

(Jreat Western Kail. (Jo. c. 

.McCarthy 425 

(jrcaves. A'j- /«jr/., .. .. ,535 

t'. Hepke 288 

Groen r. Lucas 132 

V. Marshall 252 

V. Mules 133 

»'. Thompson ... 35 

-;; ''. Wynn 468 

Green and Sons, Ltd. v. 

.Morris ... ... ... 198 

Greenoc Steamship Co. v 
Maritime Insurance Co.. 

I'td 411 

Grcenshields, Cowie and Co. 

V. Stephens and Sons ... 451 

Greenwood v. Sutclifle . . . 58 

GritSths v. Fleming . . 300 

Grisaell v. Briatowe 134 

Grover and Grover v. Mat- 
thews 388 

Groves v. Groves ... ... 3 

Guaranty Trust Co. of New 
York t'. H»nnay and 

^o 317 

TABl.K Of ('ASKS riTEl>. 


I'.nil.l r. Courad 
i;uiiii I. Holxrt* 
( iurn.v ". H«-l'r;n<J 
Ciiv I'. CliurcliiU 
(ivllH^rt V. Fli'toher 


Ilwthd, The ... •• 

llft.ll.-y I'. IJaxendalo 

u IV'f.lom • 

lUlbott). U'Il^^ 

lliilc. i-:x V"^" 
||,ilf.)nl »'. Kyincr 





Hall f. Featlieretone 

V. VVyckion 

»). Fuller 

. r. lliivinii" 

r. Wliitomatl . 

llalU'lt, 7.V •■■ • 

and C.J.. in "• 

HallettH K»taU>. /i*- 
Halsov f. L'JWfiiK'W 

UaUtiad. «•. *-* /"'^"^ 

Hambro i'. Bumand 

lliirnbun. The VoftT 4;7 

Hamilton r. Pandorf .587, l.W, 
_ f Vaughan-Sherrm 

' Ekctrical Kiipi- 
noering Co. 38, 

J). Watson 

Hamlyn ..Houston -li-S:: 












Hiinis.' Hrisco 
ti. tjuini- 



Hart V. Mills 
,' I'rat.T 

HatbfHiiil? '■■ I'"'"^ • ■ 
Hawk.n I'. Dunn 
Hawkint V. Hutt ••■ 
lliiy I . Northcote . ■ 
Iliivman, f'-r pnrte ... 
Head, lif 

Hoard y. I'illey - 

Heilbut Symons and I... i' 

H.'iibutt I'. Hicks.Jii 
Helby r. MatthtwH 

llcmpf. Catland ... - 

Henderi*.'n v. Comi.toirD K''- 
compto de I'arj-^ 

c. Stevenson 

- — I'. Williams 

Hennikor V. Wigg . 

llcntboru r. Fraser . 

Herdmann v. Wheeler 
















and C.J. 
Distillery ..- 

Hammond - . B<i;="'y 

Hampden r. Wakh . 

Hanan v. Ehrlich 

Hancock, In re 

Hands f . Slaney 

Hansen »'. Harrold . 

Harburp, etc. Co. f 

Hardy r. FothergiU 
HareV Hickarda .■• 
Hargrcave v. Spink 
Harmau r. Johnson. . . 
Harnor v. Groves ... - 
Harper and Co. *;. V igcr= t^ros. 
Harrington «. Victoria Crav- 
ing Dock ('o. 






Herdmann v >y • • -- 
Hermann v. Charlcsworth -3. 31 
Herno Bay Steamboat Co. v. 
Hutton . -^l 

Hewett, Re ■■■,■■. *'' 
Hibblewhito f. M'Morme . . . 
Hibbay. Ross 
Hick V. Rodocanachi 

Hickman v. Kent, etc. Sheop- 
Ikeeders Association 

Higgins V. Beaucbamp . • 

- V. Scott 


V. Senior 

Hillf. Fearis 

r. Scott . . 

(.. Settle 

('. Smith 

11. Wilson 

Hiude r. Whitehouse 

Hingston v. Wendt... 

Hinton v. Dibbin ... 

Hippisley v. Knee Bros. 

Hirachand Punaimhana 




il9, 145, 149 













|jii«( «. \V( -t lUdiiin Iriiori 

l''iltl'.illU < '<>.. l-t<l. 

Ilirtli (Kiiil). /;/ n 

Mill lii'i'ck r. Kilwiii'cl-i 

lliti liiic:?* ami CriiililiiirNt ( u. 

I . .\i>i'tli<'Hi l.f.illiir (ii. fif 

Aiiii'iiiii ... 
Hill lixiir r. l)f In 'I'l'iir 
lli>il<^klnNuii /■. Kciiiii- 

r. I.uiiiliiii uliil 

Nuiili WcNtcrii KmiI. Co. 
I|ii;.'iili r. I'a::i' 
Hnllolil /■. WIihIhIiiw 
Holiiio I', riniii-kill . . 
Ilnlllici I-. lili'L';: 
Hulroyd r. .Miii:.liiill 
iloltliHll.Tii, It /mill 

)li)riif .Mariiii' Ihsiimii'i- < u 
r. Siuith ... 

lliltlllT f. ANllflMl-l . 

Iliiiiifniy r. S<ti"i]ii' 
lli)iuk r. .Mullrr 
IIki.iI Kfirr.s r. Hi rini 


Iii)|ikiiis(in r. Kult ... 
lliirc i\ \VI)itiiiori> ... 

Ili.rluck (. H.mI 

lloriiH /. Miillaiiil Hail. (d. 



lliirsfnil *•. 'I'liDiiias ... 
lliMightim r. .M;itth*\v.-i 
llnii.tolioid Fire In-iuraiirc 

("o. r. (iratit 
HoTistinan r, 'riioMilnii 
Howard r. Builiie ... 
Howard's ('a«e 
Howes I'. Bishoj) 

Hoyle, Re. ti 

Hubbard, AV ;«//•/* ... 
Hudson f. IJascndalc 

V. Rpvott 

Hughes r. Liverpool VifUiria, 

etc. Society ... 

r. I'ump House llotel 


Hutfueiiin r. Baseley 

Huuible r. Hunter 

Hunt V. Fripp 

V. Hecht 

Hunter v. Frv 












lit I 

4 1 Ml 











lluitl«-r i: I'rinw |) . 

I'. \\'ult»r:i ... 

llii iiImhiiii, rill 
Hurry (. linyal KxiliJiiiye Co. 
Hii.-<«" y ''. Horiic l',i\ mi- 
HuteluiiMon ( . 'i'alliam 
Huttoii, III, Kr jiinti Ucimell 
Hyde (. Trent nnd .Mersey 
Ndvifatiun Cn. ... 
r. Wrench 


Idt", /,.(■ finrli 

Imperial Loan Co. c. Slone... 
I nrlimun i , The 
lonides r. I'ender ... 
Iredttle (. China Traders' In- 
surance Co. 
Ireland c. l.ivinL'stori 
lr\ine r. Watson 
l/.od, Inn 


Jack r. Kipping 
•laek.son c. HudHoii ... 

I'. Hotttx .Motor, etc. 


Jacobs i: Credit Lvonnais ... 

Jaeoby v. Whitinore 
J»u\etf, Er parte 
.lanson r. Driefontein 



:>:, » 









21 il! 


solidated .Mines, Ltd. 

Jardine, .Matlieson and ( 
Clyde Shipping Co. 

Jay, Erpnrte 

— V. Robinson 

Jotfprya y. JclTctye 

.lenkins r. Coombcr 

John (Jriffitlis, etc. Corpora- 
tion, Ltd. V. Humber and 
Co., Ltd 

Johnson ». Durrant 

V. Hud.son ... 

f. K Parley , , 

V. .Midland Rail. Co. 

r. n 

21, 3!>0 

.. 4:i:{ 

.. 471* 







TMll.K or (ASKS CITK.K. 


Johnston - «'li'i»|>« 
- r Kcrtliaw 

Immlhiin dnodhio. I'h> 
Jom-H. /;cpa^<^/.V•l<>«>■^;,• 

,.. |in>adh(iMt •'-'• 

V. (ioriloii 

. r. lliiiiH)hrfy'« 

. ,. St. Jolinn <'oll«'«'*. 

Oxford ... 
Hr..».. H' ■■■ ■ 
.I.M.iii.'iijoy ('.M.i>il..o '•■ »"'• 


.lurd.iii, /" "' 

.luk.-M. In re ... • • ■ 

.luni.lnii r. Natio.Kvl I'-ntinh. 
••to, lu-iiniiiri- Co. 


Kacianofi "• Jh'"-^ 'I' 

Insurance I'o 
Kurnak, The 
Knf'i, Tht ■■■ 
Kaufman i'. (iersou 
Kcarlcy '•. TliDmpson 
Kt-aron v. l't>arsoi\ 
Ki'arsU-y '■. <'<'le 

Krct, /" rr ... ••■ 

Kri.ihU-y, Maxtc.l aii.l < "• 

Ki'ilh ''. I'xirrows 
K.ln.T r. r.axter I2ti, 
Kfinl'le »'. .X.ldison 

)•. Farrcn 

Kemp ''. IVi'Tsrliii.Tii 
r. Falk 


I, "7 





lie. I 



Kn.vr .. Will' l"l"^* - 
KingHfuidr. M'»r;'^;' . 

,. .rk».'a'in '•. Att.M.lH.r<.uuli 

V. MurtiT 


Kirk»<">d r. Cadtl ... 
KihIi '•. Taylor 
Kitfliiii '■• Mawkiii'^... 
Knigl.t and TuUrna.!. , i' 
' Uuildiii< S.x'K'ty, lif 
' Knox r.t lye 
Kr.-n r. Ilfiiry 
Krug.T'-. NVilcoN . • 
Kviner '. l.'i'H-u' •• 










4. 4H7 

. 158 




14... 151, 








'151, 'l7<t, 

i: Halliday . 

Ktndal »•. Marshall . 

— V. Wood 

Kendall r. Hamilton 
Kmnody, />■'• /xirtt ... 

.-.. r. Thoraa.^ 

Kepitagalla Rubber Estat^^S 

Ltd. V. National Bank of 





,. Gough 
Kimb«r v. Barber 



l,al.ou.hfn- c. Dawson 
,.a...yr. 11.11 (187H) •• 

. -r. HilUI874) l;"2, liU. 

LagunaH Nitrate Co. >: l^gu- 

nan Symlitatc 
l.aidler v. Burlin-on 

Laing f. M'l^'l''' 

Lake, In re 

Lamb ». Evans •• •• 

LampU'iKh '' Bra.thvvail ... 
Lan.i'r«-ll '• <l>wduni.>* ot 

Uillt-ricay I'nion 

Lani;ridgt' r. Levy ... 
Larkin i\ l^onj^ 

Lavery i'. I'urHfU 

; Uw '•- Uw ... ■•• ■•• 

„. Redditch Local Board 

Uw Guarantee and Trust 
Society r. Russian Bank... 
Lawford v. Billerieay Rural 
Council ... 

Laiarus v. Cowie 

Lchel »■. Tucker ... ■•• 
Le Blan.he i\ Great Northern 
Rail. Co. ... ••. ••■ 
Le Conteur v. London ana 
South -Western Rail. Co.. . . 
Lee V. Butler 
— V. Gnfiin 
Leeds Eaiik I Walker 

Leggott V. Barrett ... 


















Leistdii Gas ('o. i\ fjeiRtoH- 

cuiu-Sizewi'll Uriian 

Lenuurda CarryiiiL' ''n. /. 

Asiatic IVtruii'Uiu t;*). ... 
Leon Hl'iin, Tim 
J^slie (R.), J,t(l. r. Slu'iil ... 
Levitt V. liamhlft ... 
Lej'land Shipping < 'o. 

Norwich Union Fire 

suranoe Co. 
Lichfield Union v. (ircrne ... 
Lickbarrow v. .Ma.>Jon 278, 

Liddard r. i.,op('H 
Liiidenau v. Dt'sboroiiirh 

Linfoot V. Pocket t 

Linle V v. Bonsor 
Lisliman v. Christie 

Lister v. Stuhbs 

Listen ('. S.S. ■' Carpathian " 
Litchfield v. Dnyfus 

Little V. Newton 

Liverpool liank ;-. Walker ... 
Liversidjje r. Ijroadbent . . . 
Lloyd V. Grace Hmith and Co. 
Lloyd's r. Harper ... 
Lloyd's Bank, Ltd. r. Cooke 
Lockwood V. Levick 
Lodge V. Dica.s 
Lomas v. Graves 
London and General Bank, Re. 
London and Globe Finance 

Corporation, /re r^ 
London and Midland Bank c. 


London and North Western 

Rail. Co. V. Bartlett 27!», 
London and River Plate 

Bank r. Bank of Liverpool 
London Assurance Co. v. 

Mansel 104, 

London, Chatham and Dover 

Rail. Co. V. t>onth Easti-m 

Rail. Co 

l^ondon Fiiuini'ial As.sDoiation 

r. Krlk.- 

London I'Vcchold, etc. (ti. 

r. Siitheid 

London General Otnnibun Co 

t-. Huiluway 








, 445 














414 ; 

35() j 






30 1 










f.oiidou Joint Stock Bank r. 

London Joint Stock Bank c. 

Sininions ... 

Longford, Tlw. 

Lovell »'. Beauchanip 34 

Lovelock t'. Fran klyn 
Lowe '. Fox 
Lucas /'. Di.xon 
Lumlcy r. (;ye 
Lyell V. Kennedy ... 

Lyon r. Morri.s 

Lyons »'. Hoffnuni,' ... 

Maas V. Pepper 477 

McConnel r. Murphy ... 202 

Macdonald r. Whitfield 327, 338 
McFadden r. Blue Star Line 431 
McGregor !. .McGregor ... 10 
McGruther v. Pitcher ... 2(i4 

Machu r. London and South 

Western Rail. Co. ... 420 

Mackay v. Commercial Bank 

of New Brunswick ... 152 

McLean v. Clydesdale Bank- 
ing Co. 303, 306, 350 

V. Fleming 443, 448 

McManus r. Bark 348 

V. Cooke ;», 10 

»/. I^ancashire and 

Yorkshire Rail. Co. ... 425 

McMyn, /» re 4()2 

Macoun v. Erskine, Oxvv ■ 

ford and Co 528 

McQueen v. Great Western 

Rail. Co . . 420 

Maddison v. Alderson . . <), 90 

Main, The 386 

Manbre Sacihaiine Co. v. 

Corn Prod iictB Ck). ... 274 

-"Manchester Trust v. Furness 441 

Mann (. Forrester 1.5tl 

Mavr.r, The 4<J7 

Marreco r. Richardaon ti2, 88 

Marryatta r. White ((4 

Marsden r. .Me;i(|ir\', rt 47(i 

Marseilles K.xtcusion llaik 
and Land Co., In /< ... 347 

Marsh v. Joseph 120 

Marshall *•. Gianvill ... 12.1 



Marten i'. Whale 
Martin v. Bourne . . 
Martin i: Reed 
Martyn r. Gray 
Mary An7i, Tlie 
Marzetti r. vVilliams 
Mason v. Harvey 


... 260 

... 298 

. . . 249 

... 174 

... 350 

... 3()» 

Provident Clothing 

and Supply Co. 
Masscy v. Sladen . . 
Master v. Miller 
Matson v. Wharam . 
Matthew, Er inirU . 
Matthews r. Baxter... 

r. Miinstcr 

MatU)ck 1'. Kinglaki 
Mavro v. Ocean Marine 










. . . 453 


... 25 
... 505 

surance Co. 
Ma.xted i. Paine 
Measures Bros., Ltd. 


Mecca, The 


Meek v. Wendt 

Mellor's Trustee i: Maae and 

Co 470 

Mendelssohn, In re 

Mercantile Steamship C-o. r. 


Mercer v. Wright, Graham 

and Co 

Merchant Banking Co. v. 
Phumix Bessemer Steel Co. 

Merry v. Nickalls 

Merry weather t'. Nixan 
Mersey Steel and Iron Co. v. 

Naylor 73,74 

Metropolitan Water Board v. 

Dick, Kfiri and Co. ... 89 

Midland Insurance Co. v. 

8n'.ith 370,388 

Uika, Ex parte 281 

t'. New Zealand A Word 

Estate Co. 

Milford v. Hughes 

Millen v. Branch 

Miller,;;*', [1893] 

, y»i re. 11901 1 

,.. pomer ... 20i 

r. Law Accident insur- 

ani'e Co. ... ... 390 






Miller ». Race ...301.324.359 

Miller and Aldworth, Ltd. f. 


Miller, Gibb and Co. t. Smith 

and Tyrer 

Mills, In re 

f. Fowke^ 

Milward v. Hibbert 
Mirabita t. Imperial Otto- 
man Bank 
Missouri Steamship Co.. lit 

Mitchell v. Reynolds 
Mitchell V. Lancashire and 

Yorkshire Rail. Co. 
Mitchell-Henry v. Norwich 

Life Insurance Co. 
Mollwo, March and Co. 

Court of Wards . . . 
Monetary Advance Co. 


Monk V. Clayton . . 
Montagu v. Forwood 
Montefiore v. Motor 

ponenta Co. 
Moran and Co. v. Uzelli 
Morel Bros. ». Westmorland 
Morison v. London County 
and Westminster 
Bank ... 313. 

V. Thompson 

Morley, Er par'e 

Morris v. Baron and Co. . 
f. I^vison ... 












105, 174 




(Herbert), Ltd. v. 


.Morrifon r. Barking Chemicals 


Morrison (James) and Co. v. 

Shaw, Savill and Co. 
Murton V. Lamb 

Moss t;. Elphick 

Moulie V. Owen 
Mount V. Ijarkins . 
Mountstephen v. Lakeman... 
Mumford t'. Collier ... 
Munro Brice and Co. r. War 

Risks Association . . 
Musurus Bey v. Gadbau 
Mutton, /n re 






. 85 





Mycioss r. (iraiit i>or> 

Myers i: Loudon and .South 

Western Kail. Co. ... 414 


Xash »■. J)e FrcvilU' ... ;t4(; 

1'. Inniaii ... ... 30 

yasmylli. The .-)05 

Nat hauH Claim 2."{7 

National IJank v. Silko ;{!!», •\:,2 
Isatioual CotTee raiact' Co. 

He 140 

Neale r. (Jordon- Lennox ... \m 

Neite t;. Wilson 5i:{ 

Neilson f. James ... 1^4, :>'!'> 

»'. Mo.ssend Iron Co. 177 

Nelson r. Dah I 434 

Nepean, /h ?v nsi 

Nesbitt c. Lusliiugton ... 451 
Neville c. J)ominion of 

Canada New.s Co. L'lt 

r. London " Expre.s.s " 

Newspaper, Ltd 2(» 

New Chinese Antimony Co. 

!'. Ocean S.S. Co. ... 44;{ 
New London Credit Syndi- 
cate V. Ncale 348 

Newbigging v. Adam 100, 102 

Newfoundland (Govt.) v. 

Newfoundland Rail. Co. 5:J 

Xewlove r. Shrew.sbury ... 47(J 
Newman (George) .and Co., 

Limited, In re 44 

Now8paj)er Proprietary Syn- 
dicate, Ltd., /a r» ' ... 237 

Nichol V. GodtH 2»)5 ■ 

NickalLs ?'. Merry ... 518, ■ 

521, 527 

Nickoll V Ashton yi I 

Nitedals Taendstickfabrik v. 

Bruster ... ... ... 129 

Nocton V. Ashburton ... 97 
Nordenfelt v. Maxim-Nor- 

denfelt Co. 24 

North and South Wales Bank 

V. Macbeth 333 

North Central Waggon Co. v. 
Manchester, She»field and 

Lincolnshire Rail. Co. ... 470 
North of England Iiisuraace 

Association t;. Armstrong 407 

Xofth WistCMi iiiink V. 


North We.'^tern Salt Co. r. 

Electrolytic Alkali Co. ... 
Nortliunibcrlanil Avenue 

Hotel Co., In it. ... 

Norton ?'. Ellani 

Nottingham, etc. HuiMing 

Sociity V. Thurstan 
Nugent ('. Smifii ... 413 






Dakcs /■. 'I'urquand ... 100 


Ockenden, F:r imHc 
Oelkers r. Ellis 

Ogden 1: Benan 

Ogdens, Ltd. r. Nelson . . 

Oliver v. Hunting 

Olyriipia Oil and Cak« Co., 

and Mac .Andrew Moi eland 

and Co., Be 

Oh/mpic, The 

Oppenheimer v. Attcn- 
borough and 


— • — V. Frazer and 

Wyatt 141, 


Oriental Steamship Co. t;. 


Overwcg, /w re, Haa.s v. 










Page c. Morgan 

Palace Shipping Co., Ltd. v. 


Palmer and Co., and Hoskcn 

and Co.'s Arbitration, A'c 

Papc r. Westacott 

Paquin, Ltd. v. Bcauderk ... 
Parker, In re ... 4H3, 

V. South Eastern Rail. 


V. Staniiand 

F&Tsoaa, Ex parte ... 470. 
V. Equitable Invest- 
ment Co. 




















I'eirsons V. New Zealand 

iShipping Co. ... 
I'atcrson v. Candasequi 

I'utnn, The 

Payne v. ( 'ave 

V. Wilson 

Peace v. Brooks 
Pearro J-. Hronks 

— ■ ^ ?•. (iardner 

Pearl Mill Co. i. IvvTiiunory 

Co 84 

Pearson ?'. Scott ... .•• 138 
Peek c. Oil. ncy ... '.10,98,99 
r. North Statfordahire 

Rail. Co 418,426 

Pem bert on r. Hughes ... 115 
Pennington r. Crossley and 

Son... «0 

Perkins 1. Bell ... ... 2«7 

Perry r, Barnett ..■ 134,135, 

Plumraer, In re 

Polak V. Everett 

Polglass V. Oliver 

Polhill r. Walter 

Polurrian S.S. Co. v. Young 

Ponsford, Baker and Co. v. 
Union of London and 
Smith's Bank 

Pontlila, The 

Pordage i'. Cole 

Port Caledonia, The 





97, 140 







National Provincial 

Bank of England 464, 408 

Peter v. Couipton 10 

Peto r. Blades 152 

Petom, The 489 

Petre v. Dnncoinbe . . . 08, 460 
V. Su.herland ... 529 

Phillips, In re 

t'. Bistolli ... 

r. Foxall 

Pickard v. Sears 

Picker r. London and County 


Pickering v. Busk ... 
r. Ilfracombe Rail. 


PickorMgiJl (W.) and Sons r. 

I.hikIoii and Provincial, 

etc. Insurance (\). 
PicUford r. tJrand Junction 

Bail. Co 

Piijnataro r. Oilroy 

Pike V. Ongley 

Pilling, 1)1 rr 

Pinhom 7'. Tuckington 
Pirie v. Middle Dock Co. ... 

Planche r. Colburn 

Plant r. Bourne 

Phimbly, In re, Kr. jvirte. 








Porter r. Freudenberg 48, 93 

Portuguese Consolidated 
Copper .Mines, Re 

Pott '•. Clejlg 


Potter V. Dutlield 

Potts ('. Bell 

Powell i: Brodhurst 

r. Evan Jones and Co. 

Power V. Butcher 

Premier Industrial Bank, 
Ltd. V. Carlton Manufac- 
turing Co., Ltd 

Prested Miners' ('o. v. 
Garner ... 

Price r. Barker 

V. East on 

— • — V. Green 

• V. Price 

Prickett J'. Badger 

Priest V. Last 

Printing Co. v. Sampson . . . 

Punnett, £« por^c 

Pye »'. British Automobile 
















372 1 Qu'uu '■• Leatliam 







Raatz, lie 

Rabone r. Williams 
RafBcs t' Vichelhaua 
Rainbow v. Howkins 

_— V. Juggins 

Raleigh »;. Atkinson 
Ram Coomar Condoo i'. 
Chunder Canto Mookerjee 





RrtiTipay '■. Alararptt 
Rarasgato Hotel Co, 

Uann r. HuphoH 
Raynor '•. (^.roto 
— — i: Preston . . 
Road r. Anderson ... 

r. Bailey 

f. Price 

Readhcad r. Midland 


Rodfrrave v. 



.. 47(i 

.. :!. 17 
.. i.-.i 

28, 135 

. i<t:i 





Friendly Society of 

V. Royal Exchange As- 
surance Co. 

and l?o\v( n, Rp r>4S, 

Rees V. Berrinsiton ... 

Reese River Silver Mining 
Co. V. Smith 

Reeve r. Jennings 

Reeves r. Biiteher . . 

Rein, Iffi 

Reusa r Piek.«ley 

Reversion Fund and Insur- 
ance (^o. i: Maison Ci>s\v;iy 

Reynolds, Re 

Reynolds '-. Smith ... 

Rhodes v. Forwood 

»\ Monies 

Rinlto, The 

Richards v. 

Ixjndon. Brigh- 
ton and South 
Coast Rail. Co. 










Roberts v. CI ray 
Roberts and Co. r. .Marsh 
R()l)ertaon v. French 
Robinson v. Cook ... 

V. Davison 

)'. Harnian 

('. Knifihts 

»•. I.vnea ... 

.— ,.. Moliett 

J', Read . . . 


Richardson v. Harris . . . 478 

r. .T.ackson ... <>8 

— r. l{owntree 14. 418 

?'. Stormont. 'I'odd 

and Co 523 

Richdale, Ex ■pnrlr ... ... 324 

Riga,The 499 

Riley r. Paekington ... J 39 

Ripon raiy, Tlip 501 

Risdon Iron and Locomotive 

Works f. Fiimcas... 
River Steamer Co., Rr 
Robarta r. Tucker . . 

Robb V. Green 
Roberta, In ri- 



— V. Rutter . . 

— Gold, etc. 


. 35 
. 307 
. 498 

. 91 

, 448 
,. 39 
20. 525 
.. 58 
. 03 


anco Insurance Co. 
Robson V. I*remier Oil and 

Pipe Line Co. ... 48,209 

Rodgers v. Maw ... ... 400 

Rodoeanachi v. Milburn ... 444 
Rodriguez r. Spcyer Bros — 108 
Roe f. Naylor{R.A.) Ltd. 14 

Kogora r. VVhiteley 351 

Rolfe »'. Flower and Co. 173. 192 

Rolph, A'r ■pixrlc 

Roacoe (James) (Bolton), T.,td. 

r. Winder 

Roacorla r. Thomas 

Hose I. Jiuckett 

Roaefield r. Provini ial Union 


Rosenbaum I" Belsoii 
Roaevear China Clay Co , Ex 


Rothschild v. Currie 

Rouquette v. Overmann . . . 
Roura and Forgas r.Townend 
Rouse V. Bradford Banking 


Routledgo »'. Grant ... 

liowcrof t r. Lomas 

Royal Bank of Scotland v. 


Royal British Bank »'. Tur- 


Royal Mail Steam Packet 

1'. English Bank of Rio 


Ruben r. (^reat Fingall Con- 
solidated ... 
Rnahworth '•. Hadlield 
Kuya V. Roval Exchange 

.A saurance Corporation ... 
Ryder 7\ Worn Invell 


















S.ifllors' Co. r. Bedcoek 
Sailing Ship " Blainnon 

Co. i: Macrcdio ... 
St. Knoth Shipping Co. 

Pli'isphate Mining Co. 
Sail- I. Lambert 
Salford (Mayor) r. Lever ... 
Salomon >'. Salomon and ( o 
Salting, Ki p'lrte ... •■• 
Salvesen v. Roderi Aktiebo- 

laget Nordstiernan 

Samuel r. New bold 

Saniucll r. Howarth 
Sandoman v. Scurr 
Sapwell f. Base 
Sasaoon (E. I>.) ' 

Assurance Co. 
Saunders v. lopp 















Seddon v. North Eastern Salt 


Seed V. Bradley 

Selignian v. Eagle Insurance 







Selot'fl Trusts, Iti ri: 
Semonza v. Brinsloy 
Serraino v. Campbell 
Sewell '• Bnrdick . 


.. 250 

. 481 
.. 413 
, . 384 

. 150 
... 93 
... 11« 
... 151 



Central Bank of 

... 351 
... 305 



Rail. Co. 




. . 428 

. 305, 

445, 446 

J 34, 135.525 


Sannderson r. Bell . . 
Saxby f. Fulton 
Seaife r. Farrant . 
Scaramanga v. Stamp 
Scarf I'. Jardine 
SchafiEcnius »•. Goldberg 
Schibsby v. Westenholz 
Schmali r. Avery 
Scholfield I- 

Sohroeder r 

Schuster f. McKellar 
Scothorn v. South Stafford 

ehire Rail. Co 

Scott, hi rf. 

r. Avery 

V. Brown 

r. Coulson 

. V. Ebury (Lord) 

r. Godfrey 

f>. Irving 

. r. Morley . . 

t;. Sebright 

i-. Uxbridge 

Scottish Navigation Co. t. 
Souter (W. A.) and Co. ... 94 

Scnrapeours Claim 528 

Sfaton V. Bumand 104, 364, 460 
r. Heath ... 104,364 




Sevmour r. Bridge 

_: V. Pickett 

Shadwell r. Shad well 

Sharp i: .Jackson ■ 

Shaw r. Great VVestern Rail. 

Co ••• 

Shaw (M. T.) and Co. 


Shellield Corporation t 

Sheldon i: Hentley . 
Shelford v. Mosey .. 
Shenaton v. Hilton . . . 
Shepherd r. Harrison 

r. Kottgon 

Sherry, Inrr 
ShiellH I'. Blackburne 
Shillito V. Biggart ... 

Shine, Be 

Shipton Anderson and Co. 
and Harrison Bros, and Co. 

.Arbitration, Re 

Shipvvay f. Broadwood 

Shute V. Robins 

Sibree v. Tripp 

Sievewright t'. Archibald ... 
Simmons v. London Joint 

Stock Bank 295, 297 
. , . 289 







140, 532 

... 299 

511, 514 

... 159 

. . . 293 

... 451 


... 125 

... 497 

... .")5t 






r. Swift ... 

r. Woodward 

Simon, In re 
Simonds v. Hodgson 

„. White ... 

Simpson v. Crippin . . . 

. . »'. Eggington 

i!. Lamb 

Sims r. Bond 

V. Landray 

V. Trollope 

Simson t'. Ingham . . . 

Sinnott v. Bowden . . 




•■! i 

.Sivcwright )'. Allen... 
Skipper aiKl Tucker i 


Smith r. Hailoy ... '.] 
'■. lii'douiii.'^tciiin Niiv 
gat ion Co. 

'•. Hetty 

'■. Chadwii- 

r. K TO roll 

('. Ferrand 

r. CJ0S8 

c. Hughes 

f. Jt^yt-H 

c. Kay 

'•. Land and House 

I'ropcriy CorjKiM- 
lion ... 
— — ('. Pros.ser 
1: Pynian 

!"i, !)! 






1H2 i 


Heynold.s . 
W'hiteuian . 

8mout I 

bnowden, A'x ;ww» ... 403 

Societe Gemrale do Pari.s r 

Walkor ; 

Societe Nouvelle d'Armcnipnt 

».'. Spi Hers and Bakers 
Societe Panhard et I^vassor 
r. Panhard Levassor Motor 

<.'o.. Ltd 

Sodergreen r. Fliglit 
Softlaw r. Welch ... 
Soltykoir, .ffe ... 30, 

South African Breweries, 

Ltd. r. King 
South of Ireland ("ollieiy ('o 

r. Waddle 
Southwell t'. Howditeh ... 
Spain (Queen) c. I'arr ... 

Spalding r. Ruding... .., 
Stamford, etc. Banking Co! 

'■. Smith 

Standard Alanufacturiii" Co 

Be ^ ■' 

Stanford, £'.(/;,/,7t |>s(,, 

Starkey v. Bank of Ent;!and ' 

•Stead V. Salt 


















Steel /. Dixon 

'•. State Line Co, 
Steele r. .McKinlay ... 
Sleiglitz r. Eggington 
Stcmman .nnd Co. r. 

Stenniiig, /,V 

Stephens /•. Lomion and 
South Western Hail. Co. ... 
Sterling, /Jr parte ... 
Stern V. 'legner 
Steven.s i: Biller ... 153, 
Stevenson v. JIcLeaa 
Stevenson (Hugh) and Song 
r. Aklien-(;e.sel|.Hchaft fur 
''artonnageii Industrie !t2, 108, 


Stewart /■. Aberdein 

''. Casey 

('. Merchants' Marine 


41(i, 438 



Insurance Co 

Stilk V. .Meyrick ... ... 

Stirling v. Burdett .. 
Stoddart /•. Union Trust ... 
Stott (Baltic) Steamers, Ltd. 

V. Marten 

Strachan v. Universal Stock 


Strang, Ex ixirle ... ... 

r. Scott 

Stray, Hx parte 

Strickland f. Turner 
V. Williams 

Stubbs V. Slater 

Studds ('. Watson 

Sulfell V. Bank of England ... 
Sumpter J'. Hedges... 
Sutton f. (Jrey ... 132 

— '■. Sutton 

''. Tathani 

Swan, J'Jx jHirlc 

r. North British Aus- 
tralasian Co. ... 21X3, 

Sweeting v. Pearcc ' 

Sykes v. Giles ... {\i^ 








527, 528 



. 78 






Tahiti Cotton Co., /« ,-,., 

Ex jmrle Sargent 531 

Tailby r. Udieial Receiver ... 247 

I AltLI'; oi r.\M.;s riTKf*. 



"I'.ilhot ' . \()ii IJoi IS 
'l'aiiil)liii Stcamsliij) ('<>. 

Anf:lo-.M<'.\iciiii, etc ('i> 
lanonbcrg mid Sons, //» 
'I'aiikMnI, Itc 
'I'arimT v. !"imirl 
'i'anslcy c. Turner . . . 
'I'iirling V. ]5a.\ter .. 
Tatam ;■. Jlaslar 
Taylor, Kx partr 

- ^ Inn (I'Mtl) 

In re (lltlO) 

?'. Jiowera . . . 

f. Calduell ... 

»'. Smith 

Slileinaii and I'lidir- 

wood, 1 n rr 

TviA,', Re 

Tebbitts JJros. »■. 8uiitli 
Tempcrton r. Kusscll 

Tirgeitc, The 

Thacker r. Hardy ...28,529. 
'I'hairlwall f. Great Northern 

Kail. (!o 

Thames and Mersey Marine 

Insurance Co. v. Brititih 

and Chilian S.S. Co. 
Thames and Mersey Marine 

Insurance Co. t>. Hamilton 

Thomas v. Harrowing S.S. 


V. Kelly . .Am, 482,'484 

r. Lewis f>00 

c. Searlea ... 

-— - — )'. Tyne and Wear 
S.S. I'Veight In- 
Hiiiiince Asso- 
'•. Tnitcd Butter 

(.'onipanies of France, Ltd. 
Thompson r. Adams 
- - — ■ r. Freeman 

V. Gardiner 

Nelson (H 

. . . .y.ii 

. . . r,',s 

... 87 

. . . 2.-,7 

... 287 


. . 600 

.. niti 

. . . 580 

. . ai 

... 257 







W.), Ltd. 
Thomson v. Davenport 


• V. Wcems 

Tiiorley (Joseph) ( 

t^.N. Co 

Thornton r. lUingworth 


Ore Ills 








Tidswcll, //' re 505 

- '•. ... 300 

Ticdi'inunn ami Ledeunann 

Frires, Ik 121 

Tindal t: Brown 32S 

Todd r. Heid 4(>4 

'I'olhurst V. As.toeiatcd Port- 
land Cement Mnnnfae- 

turer.s ... ... ... 55 

Tomkins r. .Salfery 523 

Topi is 1. Crane 133 

Torkington r. Magee ... 54 
Touche I). -Metropolitan Ware- 

lupusiny (,'(). ... ... 48 

Tre^o r. Hunt ... 194, 190 

THImw. Taylor 133 

Trinihey r. \ i^inicr 347 

Tiinder and Ci>. r. Thames, 

(Ic. Insurance Co. ... 387 

Trucman i. Lodcr ... ... 149 

Turner, Jn re 194 

('. Goldsmith ... 124 

r. Trisby 37 

'■. Trustees of Liver- 
pool Docks 293 

Turq uand, /.r par/p 504 

Tyser r. Sliipownera' Syndi- 
cate ' ... 303 

448 I 


Udell r. Athcrtou 1.52 

Union Corporation v. Char- 

rington 520 

United Kingdont Mutual 

Association r. Houston ... 594 
United States Steel Products 

Co. V. Great Western Rail. 

t^o 284 

Universal Stock Exchange v. 

Strachan ... 27, 528, .'i30 

Universo Insurance Co. of 

.Milan ?'. Merchants' Marine 

Insurance Co. ... 150,394 


Vacher and Suns, Ltd. /'. 
Ix)ndon Society of Com- 
j)08itora 51 


1.^ I 




i ■■! 



Xit^liaiio Brci. v. Hank ot 

Engliuid ... 
X'.iletitiiio r. Hyde ... 
Vuleutmi v. Canali ... 
\'ulicri ('. Boyland ... 
\ alpy i' .Gibson 

c. (Jakoley 

\';tu PraagU r. Everidgo ... 
Van Toll r. .South Eitsicm 

Rail. (Jo 

Vaiidcr J)oiikt *;. Thcllu.-ion 

Vausittart, A'« 

V'tirJuy V. Whip]) 

\'uughtoa r. London and 
\orlh Wcsteni Itail. (Jo. 

Vautiu, Ji( 

ictoriii. The 
\'iLtoriau Daylesford fSyndi- 
cak', Limited o. Dott ...'1 
\'indeu v. Hughes .. 

Vimlobala, The 

Vorli'jcrn, The 







Wain V. \Varlt*M 

Wait V. Baker 

Wake V. Harrop 

Walker, In re 

V, Mottram 

i. York and North 

Midland Rail. Co. .. i.i\i 

Waller v. Andrews (jl 

— ('. J..acy . . . . G.5 

WttUid, In re, Et purle Jenks 551 

Walter i'. Evcrard 35,30 

— - r. James , . tj2 

t. King .328 

Ward V. National hank of 

New Zealand . . . 408, 4Gy 
Waring, A'x ^jarte ... . . 349 

Warlow V. Harrison jii 

Watchom v. Langford . . , 309 
Waters v. Monarch Assurance 

'■Co 368 

Watkius V. Ry mill 418 

Watson «. Strickland ... 482 

Watteau v. Fen wick ... 136 


Jl.'> Watta ('. DriscoU 

Watts, Watte and Co. c. 

339 Mitsui and Co 

5 1 Waugh V. Carver 

38 Webb, Hale and Co. v. 
444 Ale.xandria Water Co., 

:i82 Ltd 

-77 Webster o. Webster 

8 Wcgg I'rosscr v. Evans 
Weinberger r. Inglis 

423 Weiner (. (Jill 

1 15 Weir and Co. v. (iirvin and 

557 Co 

-t»5 Wells t;. Owners of the Gas 

Float Whitton 

420 Wenman c. Lyon 

579 Wertheiin r. Chicoutimi 

422 I'ulp Co 80, 

West ot England Fire In- 
7, 72 surance (Jo. v. Isaacs 

333 Western Counties Bakeries 

500 Co., AV 

431 Westminster Fire (JlHce v. 
(jlasgow Provident Invest- 
ment Society 
Wcstzinthus, Ih re ... 
Wharton i: Mackenzie 
Whistler ('. Forster . . . 
White V. Lincoln 

-■ w- Spettiguo ... 

Whitehead v. Anderson 
V. Izod 







2 19 

Whiteman v. Sadler 
Wigan V. English 
Scottish Assurance Asso- 
Wilding V. Sanderson 
Wilkinson v. Lancashire and 
Yorkshire Rail. 


and Co. v. Uuwin 

Williams v. Bayley 

V. Carwardine 

— V. Germaine 

V. Lake 

V, Millingtou 

368, 309 
284, 285 
... 37 
... 320 
... 120 
... 487 
... 280 
... 134 







V. Pott 
V. Williams 

03, 146, 

... 132 

Williams Bros. v. Agiub (E. T.) 270 
Williamaon y. Hine 5(X) 

I'Aiil.i; Ol CASES CITED. 


I'AI 1 K 

WilliB i: I'iiliiur 


Willson 1. Love 


\\ ilson v. Ciiruloy ... 


Wiiiiblo, Bona iiiul Co. r 

I'lOsenbery and ^-Diis 

«'«1 ' 

WitliLis r. Ui-ynold.s 


Wilt r. JJaniier 


\\'iillll('l;'U V. Ciulliik .. 


Wood, ]tc 


— —- f. rntstinr ... 1.') 

S, I.V.t 

Woodall (. IViiii A.s^suraul.^ 



Woods V. Russfll 


r. Wiiiskill 


Wdokry r. Pole 


Worms V. Di! \'aldor 

114 : 

('. Storey 

4!t8 : 

Worsley, /m n 

038 ! 

Wren i: Holt 


Wrijjlit /'. Liiiiig 

\\'\M r. Ji.V 


Xiitithi), Til' 



...:t.s7, ii(i,4:{7 


N'oiigo ('. Toyiibce ... 
Vorkahire iJankiiig Co. r. 

lieatsoii ... 180 

Yorkuhin^ W'oolcombt'rs' 

Assiiciation, He 21 '< 

Young, hx ]Kirtfi, lU Kitclii-n 4.">8 

■ Sviiioiid.s 48:J 

Young V. (irotc ... ... 355 

f. .Matthew.- ... t»<.»2 


if i 

Til JO 



A CONTRACT has been dehned t., be an a-reenient 
enforceable by law («). From its nature it^ is clear 
that there must be at least two parties to a contract, 
for a man cannot contract with himself. Nor can a 
man agree to pay himself a sum of money jointly with 
others, therefore if A., B., and C. covenant jointly to 
pay money to A., D, and K., the covenant will be 
void (b). The parties must be of the same mind upon 
the sul,ject : they must be ad idem. 

Contracts are divisible into (1) specialties ; (2) simple 
{or parol) contracts. 

(1) Specialty contracts, also called deeds, are con- 
tiacts under seal. It is necessary that they should be 
written, sealed, and dehvered (c), ,^} , practice thev 

('0 Pollock on Contracts, p 2 For 
meauing of the term •' Contract," see Ai 

■"""; ! ;:,rP^'"^e chapter of PoIlock on Cont, i 
{0) Ltlm V. Ken; f 19011 1 Cb. 529 
(c) Co. Litt. 171 b. 


■tcussion of the 
tracts, Part I,. 


Ikl ta. 

2 Gknkral \ik\v ok jiii; \aw oi 


are always .signed {d}. Tlie writiuj,' m&y be bv iiurul nv 
in print, and on piii»<'i (»r jmrtljuiout In nuMloin times 
tlio Html has becoini" a wafer or a nu-io )»ieee oi wax 
which has been previously attaeiio.l to the document ; 
the party " seahng " touches it with hi^ finger, and so 
adopts it as his seal. Delivery may bo actual— kc, 
handing over the instrument— or constructive— (.c, 
speaking words importin;,' an intention to deliver. As 
a rule, when the person executing toiiciies the seal, he 
says, " 1 deliver this as my act and .ItMui," and this is 
sufficient delivery, thouj^h he keep it lu his own po.s- 
session (e). If delivery is made, subject to a conditicm 
to one who i- not a party to the deed, 'm document is 
called an escrow, and then takes ettect only wlicu the 
condition is fulfilled. Whether it can be an escrow if 
delivered to a parly is an open ijuestion (/) ; but. at 
least, if that party be one oi several grantees, and also 
solicitor of the grantor and the other grantees, the deed 
may be an escrow if conditionally delivered to him in 
his character of solicitor (g). At one time a distinction 
existed between an indenture and h deed poll ; the former 
has the edges indented, the latter is cut square. There 
is, however, now no difference whatever in their legal 
effect (h). 

Specialty contracts differ from simple (or parol) 
contracts in the following respects: (i) No ccmsider- 
ation is reiiuired (t). (ii) A contract by deed merges 

{il) As to whether this is nccessaiy, 8co IJacon, Abr. Obliir. (C). 
(e) Doc tl. Gariions y. Knight (lS:.Mi), 5 B. & C (>71 

aOS •Is-'''' ^^^^'^'' '^""''■'"^- ^^' ^'^' J'^'i'^on V. Jicvctt (1821)), r, Jii.ig. 
J'^lh^'lti' ^•''■'''"'W' ''^•- tV. V. Sagidd, [|,y>7J -1 Ch. (iUS. at 

I'M* 'i^ 1 f \Ja^^t 

(/<) Ileal IVoperty Act. IS4.j, s. 5. 

(0 See, p. Ki. iJut in the abaunce of tuusiderdtiou, e<iuity 


at Itself Hii Hj^reemcnt to tli« saino eflect rontamed in u 
siini.ltj! roiitiact. (in) A stutement in u simple cdntrwi 
IS presiunpiive evidenct! of its tmth »>(ain«t the niuker 
<•! it ; in a dmi it is absolutely couthiwive, unless fraud 
or «hiies8 tun bo proved, or tiie laLse (statement is due 
U> a mistake in respeet of wliith equity woi 'd ^rant 
relief. This is styled isiop/^tl by dvid. (iv) A light of 
action arising out uf a tontiact under seal is barred by 
non-exercise for twenty (or in some cases twelve) years ; 
■d 1 ight on a simple coutruct is barred in six (k). 

(2) Simple rontracts. This class contains every 
contract n(»t under seal, whether written, verbal, or 
implied. " Jf they be merely written, and not 
iuK^ialties, they are parol " (/). Writing is often 
required, thouu;h in many cases there is a subsistin--^ 
c»»utract without it, the writing being but necessary 

^inother classification of contracts (which does not 
depend upon their form) is into executor ij and executed, 
the former being one in which a party binda himself t(i 
do or not to do a given thing [e.g., exchange horses 
this day week), the latter one iu which the object of 
the contract is at once performed {e.g., exchange 
horses, which is done at once). A further division Is 
into express and implied, the latter being (according 
to Blackstono) tliose - which reason and justice dictate, 
and which the law, therefore, presumes that every man 
undertakes to perform." Contracts of record may also 
be mentioned ; they consist of such as are proved by 
production of the record of the court. The only 

\nll not «iaiit !^ia-i:iiio p.'iformance (GVocr.v v. (,Voi.r.« (1829) 3 V & J 
"•■' ; -'^i/'-'if- >• V. Jifjcnji, (iS41), Ci. & i'ii. I3a, Ili). 

(A) Suo piMt, pp. »;{ a ncq. 

(I) liuHH V. UH.jhti (177«), 7 T. 11. :{5U. 

4 General View of the Lvvv of Contracts. 

important modern instances of contracts of record are 
judgments and recognizances. 

Formation of a Contract. 

A deed (as before stated) must be in writing and 
under seal. There must be consideration to support a 
simple contract, but otherwise, with certain exceptions 
hereinafter mentioned, no particular form is necessary ; 
nothing but agreement, however shown or expressed, is 
required for the formation of a contract. The a»ree- 
ment may be drawn up in writing ; it may be partly 
written and partly verbal ; it may be entirely verbal, or 
it may arise from, and be proved by, the mere conduct 
of the parties. If a man hails a cab and directs the 
driver to take him to the Tower Bridge, he and the 
driver have entered into a contract ; if he takes a boot- 
lace from an itinerant vendor and hands the vendor 
a penny, they have entered into and performed a 

Sometimes, however, some special form is necessary ; 
if so, this will be either writing under seal or writing 
under hand ; and sometimes, though a verbal contract 
may be good, it may be unenforceable by action imless 
evidenced by writing. 

CoHlmcts which must be entered into by Deed.— 
Among these may be mentioned : (i) Contracts made 
by corporations ; but there are many exceptions (m) ; 
(ii) gratuitous promises (n) ; (iii) leases for upwards of 
three years (o) ; conditional bills of sale (p). 

(m) See post, pp. K"), 16. 

(«) See f>ost, p. 17. 

(o) Statute of Frauds, ss. 1, 2, aiul Real Property Act, 1845 s 3 

(p) See podt, p. 480. 

Formation of a Contract. 5 

('Ontrarts which must be in Writing. — These include : 
(i) bills of exchange and promissory notes ; this is 
required by the Bills of Exchange Act, 1882, and was 
formerly so by the common law (q) ; (ii) contracts of 
marine insurance (by the Stamp Act, 1891. s. 93). In 
addition there are certain transactions, closely connected 
with or involving contracts, to which writing is necessary ; 
for instance, an acknowledgment to take a debt out of 
the operation of the Statutes of Limitation, to be of any 
effect, must be in writing (r) ; transfers of shares in 
companies are usually required to be in writing. 

Contracts which are Unenforceable by Action unless 
in Writing. — By the Statute of Frauds, s. 4, it is provided 
that no action shall be brought on any of the following, 
unless evidenced by some memorandum or note in 
writinj. igned by the party to be charged, or by his 
agent authorised thereunto : (i) Promise by an executor 
or adniinistrator to answer damages out of his own 
estate ; (ii) to answer for the debt, default, or 
miscarriage of another person ; (iii) an agreement in 
consideration of marriage ; (iv) a contract concerning 
lands, tenements, and hereditaments, or any interest 
therein ; (v) an agreement that is not to be performed 
within the space of one year from the making of it. 

By 8. 4 of the Sale of Goods Act, 1893, it is provided 
that " a contract for the sale of any goods of the value of 
ten pounds or upwards shall not be enforceable by action 
unless the buyer shall accept part of the goods so sold, 
and actually receive the same, or give something in 
earnest to bind the contract, or in part payment, or 
unless some note or memorandum in writing of the 

((/) Section 3(1), (2). (r) See ikmI, p. 8t>. 

6 (teneral View of the Law of Contracts. 


contract be made and .signed by the pai tv to be charj:;ed 
or his ai^ent in tliat behalf " (s). 

The provisions of the 4th sections of the Statute of 
Frauds and the Sale of Goods Act do not affect the 
existence of the contract ; they merely render it unen- 
forceable by action, unless it be evidenced by writing 
which fulfils the conditions of the statute. Accordingly, 
as the contract exists independently of the writing, the 
writing may be made at any time preceding the com- 
mencement of tlie acti«)n. but not afterwords (t), and 
any document signed by the party to be charged, or his 
agent, and containing the terms of the cimtract, is 
sufiicient to satisfy the statute (?<) ; e.g., a will or an 
atlidavit {ii). Of course there must be consideration in 
every case, unless the contract be under seal, and it has 
further been held that a statement of this consideration 
must be included in the writing (x) ; but as regards 
guarantees, this is no longer law since the Mercantile Law 
Amendment Act, I806, s. 3. 

The memorandum need not be on one piece of paper ; 
it may extend over several, provided that these are so 
connected and consistent that they can be read 
togetlier (//). If the signed paper does not of itself 
show a connection witli the unsigned paper, and is not 
in itself sufiicient. the memorandum is not complete, 
and parol evidence will not usually be allowed to 
connect them ; but identity of documents, persons, 
parcels and subject-matter referred to in the writing 
may usually be shown by oral evidence ; e.g., the term 

(x) This section is further dealt with jiosl, pp. 252 et Kcq. 

(I) Lucas V. Dixcm (1889), 22 Q. B. D. 357. 

(u) ReHuijle.[mm 1 Ch. 84. 

(x) Wain V. Warllers (1804), 5 Kast, 10. 

\y) Boydellv. Dnimniond (160% 11 East, 142. 

Formation of a Contract. 7 

" ,)ur arrangement " was used in a letter, and thia was 
allowed to be connected with an arrangement set out in 
a previous note, the whole being then taken as the true 
contract (z). And if two or more documents, which do 
not refer to each other, do refer to the same parol 
contract, thev will constitute a sufficient, compliance 
with the statute if they, taken together, contain the 
tertns of the parol contract («). A letter, which would 
be a sufficient compliance with the statute if it contained 
the name of the person to whom it is addressed, may be 
made complete by means of the envelope in which it 
was sent (6). And where a signed letter sets out the 
terms of a contract for the purpose of repudiating it, 
if the .'round of repudiation is not good in law, it will not 
prevent the letter from being a sufficient memorandum 
within the statute (c). A letter written by an agent 
within the scope of his authority which refers to an 
unsi-med document is a sufficient memorandum although 
the 2gent was not expressly authorised to sign the letter 
as a record of the contract {d). 

The name of the party charged must be on the paper, 
but, in addition, the name of the other party, or a 
sutlicient description (with which ho may be connected 
by evidence), must be inchided (e). Thus, a description 
,)f a party as '• the proprietor " has been held sufficient 
where one proprietor only was in existence (/) ; on 

(:) Cnrr v. lladingM (1881), 7 Q. B. 1>. 125. 

(a) St,>d<ts V. Walson {1885), 28 Ch. 305; Oliver v. Hunting 
(IH'.IO), 4-4C11. D 205. 

(b) Pmrcc V. ilardner, [18971 I Q. B. 088. 

(c) />«mrv. J/.«to/(,[iyi2].2K. B. :i73. 

(d) John GrtjjUlis, etc. Corporaliun, Ltmtled v. Iluinber d: Co., 

'"^ii^S'^m^^r (1805). I B. & P. N. B. 252 ; WUl.arns 
V Lake (ISf.O), 2 E. & E. 349 ; 2!» L. J. Q. B. I. 
(/) *'((/(; V. L<uiiJj<rl (1874). 18 Kq. ». 

« f.KN-....«, V,E,v OK TH. Law op (.•ontract.,. 
tliB "tlier hand, ■•vendor" I... i, 

■1 wmtraot (A). ■ ' »"''J«t-"">tter „f 

suffice WThTi ''■'■"''' "T' "'■ "■"" '""''''" -" 

it nec^ not be a L a '4TTa t'"'" ''°™'"™' 
a<'rpp Pf^ " 1 , •^•' " ^ "^»n beam "1 A li 

.^^it-;a«tdtr'Tr ''' '-'" ^'"^'^t 

tl,e partv to be oha !«l , ?^TT "*>' "^ """ "' 

l.i» principal bv i,i, ,il", ,e"' "7^°"" ■" ''"*»S 
"t fact wbicl,- ^ultbT! » ?"'' ""' '■" I""-'*'"- 

ci.ou,n.tance., «d vi tT^'^f ^""""^ '" '^" 

principle of age,;t ; w t7:^zv'' '""r 

"X^t must bave , -nprf „. ^ ' '"'»'«-er, tlie 

»isn for the otl.: An aS"' '' ''°™"' ""^ "'"^'" '" 
the vendor and i„ . ""f '"««'■ ■» ag™t to sign for 

after the „t C bl/''V'", f"' '" «"■ I"'™' ■''^o 

signature w 11 In bindT;, '°™ *" *' '"'>-'^ ^ ■>'' 


j) Baker v. D,„i,,y (,^3^ «j, ' ^-^.^ 34-. 

(0 6Won V. Calon (18«7) r r o u V ■-.- 
('») A'irt,M V. /y«t,«, fl892l'i (rn rh '^'' P**" I-o'ti Westbury 
(«) Inn Pruwjh v. A'ren(/«, 1^09 1'^T-, . . 
[..unt. ! li«.:(! I vu 4;54 ^ ' ' ""^' ^ <^''- 2«« ; reversed c.rx another 

Formation of a Contract. 9 

This implied authority of the auctioneer does not exten.l 

be fatal to the action brought upon it if t^!' 

is of tha «i„ i^- 1 ^ ^ *'' " the contract 

would be t t'""'' ?''" '"^ P™P" eircumsunce, 

existence of the contract (y) " '"''"^***^« <^'> the 

parol c„„tra..t, evea though in a able .rfh '';''''™' 

because it is not in writrnV ,3 "','"""" "'""I "Pon 

or implied rescission rf th! ^ '"™"= ^■'' "» '^'=P«^' 

The ,1™, s;z" itzm bTred™"'"" '?• 

contracts within s. 4 of the Statu:!' F^ant " "«"'" 

"" ".ircrs: ^rr"™ <" ■»-"•«« -- 

vi^iuuaeu with a promise to marrt/ • +i,„ 

a«„,e„t referred to L the st:tri-,„t 
:Z, - an a,re,.„,e„t for a carriage sctUe' 

(<>) /hll V. Balli ri«u7i I /<!. . 



General View of the Law of Contracts, 

(<•) W hat constitutes an interest in lands, tenements, 
and hereditaments is a questiijn of property 
rather tlian of contract law. A dobenture of 
a company ^Mving a floating,' charge over " all 
property of the company whatsoever," creates 
an interest in lands if part of the company's 
property consists of land or buildings (^). 
This section applies to contracts concerning 
lands, though they be not contracts of sale (t). 
(d) Agreement not to be performed within a year 
wdl include any agreement which cannot be 
performed on either side within the year, or 
which the parties intend not to be performed 
within that time («). If, however, the contract 
is to be performed within the year by one 
party the statute does not apply (x) ; but the 
mere fact that the contract is capable of being 
performed on one side within the year, when 
it was not the intention of the parties that 
this should happen, does not exclude the 
operation of the statute (y). A contract for an 
indefinite period, which may come to an end 
within a year by the happening of a contingency, 
e.g., a contract to allow a wife a weekly sum for 
maintenance during her life, is not within the 
section (z) ; but a contract for a definite period 
exceeding a year, which by its terms is subject 
to determination by notice by either party 
within the year is nevertheless required to be 

(s) Drinrv. liimil, [ISiKi] 1 Q. H. 744. 

(/) Kav, J., in MrMatniH v. Cmkn (1887),'.ir) <'li T) at p 087 

(m) Prhr V. Co,rij,ln„ (Um). I Sm. L. ('. (I2tli td ) ;<5;{ 

(.IT) Vherri/ v. l/emi ii>j (IS49), 4 Exrh. tVil. 

(y) Rirrr v. J, rrnuiy.s, [lillO| 2 K. B. 622. 

(;) MLCrnjnrx. .l/cfV/Tf/oc (1888). 21 Q. 15. 1X424. 

Proposal and Acceptance. 


\n writing ((/). This provision also applies to 
a.irreenients for the sale of goods, and accord- 
ingly, if any such agreement is not to be per- 
formed within a year, it cannot be enforced in 
the absence of a sufficient memorandum, 
although there has been acceptance and actual 
receipt of part of the goods sufficient to satisfy 
the requirements of s. 4 of the Sale of Goods 
Act, 1893 (6). 

Essentials of a Contract, 
TJiere cannot be a contract imless there has been 
mutual assent to the terms. Whether they be express 
or implied, a proposal and an acceptance of 'the proposal 
are the elements into which every contract may be 
analysed (c). In addition to these, all contracts not 
under seal (and contracts in restraint of trade, though 
under seal) require consideration to support them. 

(i) Proposal and Acceptance. 

A. may offer B. a book for sale at a certain price, 
and B. may say, " I take it at your price," or A. may 
expose it for sale on a book-stall, and B. may, with 
A.'s assent, t;\ke it up and remove it, saving nothing 
about price. In either case there is a clear contract— 
a definite proposal and acceptance ; in the latter case 
to pay the fair price of the book in return for the 

In //"",""/ \^^'''^''''' n!'l2] A. C. 39 ; [lOll] 2 K. B. 1050. 

1 1« 1 1 1 /'if 1 f'.-"' ^'^- ^- ^'"'""'' f'-^'^l '■^ K. B. 77<i; affirmed 
li.tlll 1 K. H. 42;> ; and fw>e porf, pp. 25:5 255 '^5- 

JmLT. ^f "'■'' T !-'°n^'»''t''> PP- ^5-7. where the uoiverBal 
appii. abihty ot this analysis ia questioned. 





The proposal need not be made, in the first instance, 
to any partjcular individual, but mav be nmdo to the 
general public, provi.led that it can be accepted bv a 
dduute person whose le,al relations it was intended to 
a«cct. In Carhll v. Carbolic Smoke Ball Co. (d) the 
facts wne these : defendants issued an advertisement 
•n whKh thev offered to pay £10(» to anv person who 
should cotitract a certain disease after using a certain 
remedy m a specified manner and for a specified 
period ; the plaintiff duly used the remedv. and con- 
tracted the disease, whereupon the Court: of Aj,peal 
held her entitled to the £100. Here was a definite 
proposal to anybody who would perform the conditions 
and It was accepted by one of the persons to whom it 
was made. Other examples of this kind are : advertising 
a reward for services to be rendered (e), advertising 
unconditionally m a time-table that a train will start at 
a given time(/). 

Further, the proposal must be accepted absolutelv, 
and on the same terms as offered. If there is an offer 
to go to London for £oO, which is accepted subject to a 
call being made at Guildford on the way, here is no 
contract ; but if the first party assent to this, here is an 
agreement not dependent upon the original offer, but 
on the acceptance of the counter-proposal (f,) 

It IS not always the party who makes the first over- 
ture who IS the proposer. For instance, a 
advertises that he has a cheap lot of goods for .sale 
he IS not the propose, making an offer for a contract of 

{<!) [ISiKJI 1 Q. B. 250. 
Harrison (18.58), 1 E & E 2<r, ^- "' ' "'"'o"' v. 

.J) Hiidt V. WW, „rh (1840), .-{ B.-av. 334 -^''- 

Proposal and Accei-iance. 


siiN-. he is but lioldiii- liinisclf out as reudy to cM.nsider 
oH(Ms made to liitn. So when a company issues its 
prospectus, and asks for applications for shares, it is 
v(My seldom that the company so words the prospectus 
as to make it a proposal to the public— it is usually but 
an advertisement that the company is ready to consider 
oilers ; the applicatiiui for shares is then the proposal ; 
rli.^ allotment is the acceptance. The question is 
almost entirely one of fact, and must dei)end for its 
solution on the circumstances of each case (h). 

An a-rreemcnt will be binding when the proposal has 
l>«-en dehnitely accepted, even thouj^h the parti(^s 
contemplate that the contract shall be afterwards drawn 
up in a formal sliape (/). [f there is a simple accept- 
ance of an offer, accompanied by a statement that the 
ac(teptor desires that the offer should be put into some 
more formal shape, the mere reference to such a desire 
will not make the agreement already arrived at unen- 
forceable ; but if the agreement is made subject to 
conditions specified, then until those conditions are 
accepted there is no contract (k). If the contract is 
coutamed in correspondence, the whole of the letters 
must be looked at to see if the parties have got beyond 
mere negotiation and have concluded an agreement (l). 
An unaccepted proposal will not affect the rights of 
the parties, nor will a mere mental acceptanc'^e, un- 
communicated to the proposer (m) ; but the proposer 

I 'tl ^'Ti^^'v 7."^"^^ Ortatjorlhcrn JiaU. Co. v. HMam (1874). 

1 Q B 25(i ^' ^^'"''^'''"^ "^'"""^^ ^''^^ Vo.,\mrs\ 

(i) Boltoti Partners v. Lambert (1889), 41 Ch D 295 
{k) Crosdeij v. Maycock (1874), 18 Eq. 18 i 
(l) llmsc}, V. Uome-Payne (1879), 4 Api,. (jas. 311. 
pp.t9lfS."' ' .V./ropo/.ta« Rail. Co. (.877). 2 Api,. fas. «6,i, at 

11 (iKNKHAI. ViKVV (»!' TJIK J,A\V (H ( OM KACT.S. 

limy waive, notilication by spctifyiii-,' a |mrti(Milar act 
whic^h ho will a;,'ri'e to take as notice of a(cfi[t(aii((5— 
c.y., if the person makiiii,' the ollVr cxpii'sslv or im- 
pliedly iiitinmtoH in his ulVei- that it will Millico to 
act on the oiler, so actinjf will he a sufficient c- 
ceptance (//). 

An acceptanc(f may ho. tacit if of muh nature that it 
turn bo itonmninicated to the proposer; an illustration 
of this is the case of a person who buys a ticket from a 
railway company containing words tliat tlie ])assen<icr 
a;;rees to take it subject to conditions on the back or in 
the time-table books of the company. If the jury is 
satisfied that the passenger had reasonable notice of the 
conditions, the acceptance of the ticket will be deemed 
to be a tacit acceptance of the conditions as part of the 
contract (o). But in commercial transactions if a 
document is handed by one party to another and 
accepted by the latter as the contractual document, 
there is no oblij,'ation to call the attention of the recipient 
to its conditions, and he will be bound by them unless 
the conditions are so printed or are in such a position in 
the document as to mislead a reasonably caieful business 
man (p). 

A proposal, if the mode of acceptance is specified, is 
not properly accepted, unless it is accepted in the pre- 
scribed manner— c._9., if the offerer say you nuist reply 
by wire in twenty-four hours, he cannot bo bound by 
any acceptance not conforming to this direction. 

A proposal may be withdrawn at any time before 

(«) Caiiiil V. Carbolic Smoke nail Co., 119831 1 Q. li., at ii. 27(1. 

(o) Pnrkrr v. South Eaukm Jiuil. Co. (1877), 2 ('. 1'. D. 41(1; 
lltnihrsou V. Skirnwii (IS75). J.. J{. 2 li. h. Sc. 470; UklKwhon \ 
Uou'iitrtc, 1 18!»41 A. (.'. 217 : Flooil v. Atnhor Line, | I'US] A. V KM 

(p) Hoc V. U. A. Sayloi; Ltd., [101 7J 1 K. li. 712. 

PrOI'OKAL, and A0CErTAN(;K. 



iurrptanco : tin -i, a bid at un uiutinti in iu»t binding 
till iicceptetl ^v th«i fall of the Imniiner (7) ; hut fm- 
such withdrawal to \ni effectual tho revocation nuiMt ho 
coniinuuicated t<j the '>thor party (r). If, wh<'u the 
offer is made, the proposer says that he will keep the 
offer open for a certain time, he may nevertheless revoke 
his proposal holuro the expiration of the time, if he has 
rfcoivod no consideration for the promise to keep his 
offer open (> . and if he communicates his revocation 
before the otlier party accepts (<)• When the proposal 
i^ made by post, and whenever the circumstances are 
sucli that, accordinjf to the ordinary ways of mankind, 
the post mif^ht be used as a means of communicating' 
the acceptance of an offer, the acceptance is complete as 
soon as it is posted, and neither acceptance nor proposal 
• an be revoked after that time (m). A revocation cannot 
take place after the acceptance has been duly posted (u), 
although it may not have arrived (x), or may never 
arrive (y) ; and to be of any avail the revocation of a 
proposal must reach the acceptor before hi posts or 
telegraphs his acceptance (r). The acceptor, by posting 
the letter, has put it out of his control, and done an 
extraneous act which clenches the matter, and shows 
beyond all doubt that each side is bound (2). In this 

(q) Payne v. Gave (1789), 3 T. K. 148. 

(/) Byrne v. Van Tienhoven (1880), 6 (J. T. D. 344; Uteveimon v. 
McLean (1880), 5 Q. B. 1>. 340. 

(«) Roailedije v. Grant (1828), 4 Bing. 053; Dickenson v. Vodda 
(1870), 2 Ch. 1X403. 

(0 Byrne v. I'an Tienhoven, supra. 

(u) Uentliorn v. Fraser, [1802] 2 Ch. 27. 

(x) Dunlop V, Higgins (1800), 1 H. L. Cas. 381 ; Uarri/i t'lme 
( lt>72), L. It. 7 Ch. 587 ; Byrne v. Van Tienhoven, supra ; Ulevcnuon v. 
Ml Lean, supra. 

(y) Household Fire Insurance Co. v. Grant (1379), 4 Ex. 1). 210. 

(z) Lord Bi,\rKniTRN iu Rmjden v. MHrofAH"" Rail Co. (1877), 
2 App. Ciw. 000, 091. 


coiuiocMmii Ml.', rii,s(!.s ..I .Uaitis v. Undsdl (a) and 

Ihfrne v. Van Tunhmyn {h) jiio in point. In tho 

fwrnior, \. wtDto. on Soptember 2n(l olTerini? to sell 

wool jit id price, and askinj,' for an answer in course of 

post ; lh<^ letter bein^' niisdirecttMl, mu Iicd only on tho 

Till : tli«> answer, an acceptance, was sent at <»nce, and 

came on the Dth. but the wool had been sold on the 

Hth. It was held that the buyers could recover for 

non-delivery of the wool. In Bi/rm v. Vnri Tienhorm, 

defendants oll'ered ^oods for .sale to the plaintitls on 

October 1st; on tho ilth the letter arrived, and was 

accepted by wire at once. On the 8th, the defendants 

had writtiMi withdrawing^ the otfer, and this was received 

on the 20th. The withdrawal was held to be too late. 

LiXDLKY, J., said : " It has been uri^ed that a state 

of mind not notified cannot be regarded in dealin<',s 

between man and man, and that an unconuimnicated 

revocation is, for all practical purposes, and in point of 

law, no rovocation at all." This view the learned judge 


The proposal may lapse otherwise than by revocation 
— e.g., by lapse of a specified timo, by lapse of a 
reasonable time (c), or by death of the proposer or 
acceptor before acceptance. 

(ii) Consideration. 
This has been defined as " soino right, interest, profit, 
or benefit accruing to the one party, or some forbear- 
ance, detriment, loss, or responsibility given, sull'ered, 
or undertaken by the other " {d). It is divisible into 

(a) (1818), I B. A: A1<1. tiSl. 
(6) Supra, p. 15. 

(c) Ramagate Hotel Co. v. Mo«/«/i'(>r« (ISHti), I,. K. 1 Ex. 10!». 

(d) Carrie v. Jiw« (1875), L. R. 10 Ex., at p. 102. 



I nriitnl, or rjrnitoni, uiul />»<»/ or pnnvut. Kxoniti'd 
(•Hiisi«l»'rufi<in .-visls in (cy.) thr foll<»wm« ta-sM : wlit;u 
A. imioeM to s(fll u hoi.s*' to li., and ininu'diutiily tak«,s 
tlio int)nf'V and i^ivfs the horso ; hut B.'« ton.sideration 
is ('xncutoiy if h« is to pay the money at a future time. 
In cithrr case then? is a piosent conwideiation. A pawt 
( nnsidt'iation exists wht'ii a promise is machi to pav for 
sorvices uht'iidy ;;ratuito\isly r«'ndored, in resptMt «>f 
whicli MO h'ual lia})ility was incurred hy tlie party 
Itni. 'tiled. Such a promise, altliou<,di it may he hased 
ii|toii a moral ohhjiation. is not hindin^'. Sir William 
Anson lays chiwn the following yeneral rules as to 
((•nsideration : 

1. it is necessary to the vaiiility of every contract not 
under seal. 

1. It need not l)e a<le(iuate to the promise, but must 
he of some value in the eye of the law. 

15. It must be legal. 

4. It must not be past (c). 

1. That there nuist be .some consideration to .support 
even a written lontract, unless the contract be under seal 
or of record, is a principle of our law, for Ex nudo paclo 
mm oritur actio. This was clearly expressed in the case 
of Rann v. Hw]hes (/). It might seem at first glance 
that bills (if exchange and similar instruments are 
exceptions, but such is not the case ; by the custom of 
uicrchants, these import consideration — i.e., considera- 
tion is presumed, but, as between immediate parties, 
this presutuption may be rebutted. 

2. Once consideration is proved, adequacy is not 
important : the contract may be in consideration of £10 
or £100, or of 10s. The contract may be enforced, if 
^r) Law .if ('(.utra.'t8 (Uth cd.^. p. W. (/) (1778), 7 T. R. 350. 

18 Gkneral Vikw oi tiik Law oi' Contkacts. 

the [Jiomise is " either foe the beiK^iit oi tlic tha'eiidaut, 
or to the trouble or prejudice of tiio phiiutiflt " (y). 
" The adequacy of the coasideration i.s for tlie [)artie8 to 
coiisidor at the time of making tlie agreement, not for 
the court when it is sought to be ei 'orced ' (/?). But 
tlie consideration must exist, and be real. A mere 
pretence of it will not sutiice. Thus work done, how- 
ever Httle, would sutiice as consideration for a sum of 
money, however great ; but gratitude would not support 
a promise, any more than would blood relationsliip. 

Thus, the following are sulficient to support a con- 
tract : Payment of money, compromise (jf an action, 
giving up a claim which has been honestly made, though 
in fact the claim is one which could not have been 
enforced (t). Inconvenience sustained at the recpiest 
of one party may be good consideration- "7.. the 
constant snilhng at a smoke ball {k). A forbearance to 
sue on rc(piest will be good consideration, though there 
be no binding contract not to sue (/). 

The following are examples of agreements which are 
bad. not on the ground of inadequacy, but of non-exist- 
ence of consideration : A promise founded on moral 
obligation alone (m) ; a promise to do what the promisee 
can legally demand alreaily ; but if a third party asks a 
contractor to carry out his contract, tliis may be good 
consideration as bstween the contractor and the third 
party. Thus, in Sfiadtvell v. bhndwell (n), an uncle 

(£/) Cora. Dig. Action on the Case in Assumpsit, H. 1. 
(h) Blackburn, J., in BoUon v. Mtuldtn (1874), L. H. 9 Q. H , at 
p. 57. 

(1) MiLs V. Xtw ZeiUand Alfurd KsUUc Co. (1886), 32 Ch. D. 200. 
(k) CarliU v. Caibulic Smoke Hall Co., | lKi»3| I (^. H. 2r.(). 
(/) Cruusv. /lutUer(]HSl), 19 Q. H. I). ;{tl. 
hi) l-:.i.^fir,Ht<l V. Kn,i/un ( KS4U), 11 A. & E. 4HI. 
(") (ISJU), 'J V. H. (^.s.) 159. 

/ ^ . 



'>!",'Mcd ail annuity to his nophew if li« would carry out 
previously airaiiued ontiaf^emont with A. B., and 
linent of the latter was held enouf,'h to support the 
uncle's promise. Payment of a smaller amount cannot 
alone be consideration for discharge from an a^'reement 
to pay a lar^^er amount (o). In Foakes v. Beer (p), a 
debtor agreed to pay a judgment debt by a part pay- 
ment down, the remainder by instalments, the creditor 
meanwhile agreeing not to proceed with his legal 
remedies. The House of Lords held that the debtor 
gave no consideration, as he could have been made to 
do wliat he did independently of his later promise ; 
though had a bill of exchange been given, this would 
have probably amounted to good consideration (q) ; 
and clearly if tlie smaller sum had been, by agreement, 
paid before the full payment became due. In view of 
this it may be difficult at iitst sight to find the con- 
sideration for a composition with creditors, but it 
exists iii the mutual surrender by the creditors of their 
individual claims, and not in the payment of a smaller 
sum for a greater (r). 

The rule in equity as to adequacy of consideration is 
the same as at law, but equity is always on the look-out 
to defeat fraud, undue influence, etc., and in many 
cases inadequacy of consideration is very material to a 
proper decision. 

3. The legality of the consideration will be dealt with 
below under the general head of Contracts whicli the 
Law will not enforce. 

(«) Ciimhiry. Wane (1721), 1 Sin. L. ('. {I2tli cd.l :{"»>. 
(p) (lSS-1), App. Cus. 005. 

(<y) .S//(;<r V. 'Iriiip (1840), 15 .M. iV. It. 2:i ; /j'cWtr v. liiuhjcii 
(IS8S), :57 Ch. 1). 400. 
(r) Good V. Vhtcsmau, 2 B. & Ad. a28. 

20 (;i.;.\KH\r, ViKw ok thk of Comkacts. 

•1. The considcjation nmst not bo jtast. "A mere 
voluntiirv courtesy " is not suificiont to support a sub- 
so(|uent proniise (s). Thus, the nicro oxistence of an 
iint<'(edent debt is not sufficient vahiable consideration 
for a security ^iven by the debtor (t). But if tluuo is 
an express or implied agreement to yive time for pay- 
ment, or if the creditor in fact forbears to sue on tlie 
faith of the security, even for some indefinite time, such 
jrivinj,' of time or forbearance will c(mstitute sufficient 
consideration. Securities so given will therefore seldom 
be impeachable for want of consideration in cases where 
the fact of their execution has been communicated to the 
creditor, and he has not immediately .sued the debtor (a). 
The followini,' appear to be exceptions to the j^eneral 
rule : (i) it is .said that a past consideration will be 
enough, if it has been given at the request of the person 
making the subseipient promise— c.//., if A. requests B. 
to do certain work for him, and some time afterwards 
says, " You shall have £10 for that," the consideration, 
though past, is good (x) ; (ii) where a party originally 
received benefit from the consideration, but some law 
{e.g., Statute of Limitations) prevents the giver of the 
consideration from enforcing his rights, a promise by 
the party who received the cimsideration to perform his 
contract will be considered good (i/). 

(,s) Stc notes to Lampleiijh v. liiaiihtvait (l(>15), 1 Sin L (' 
1 1 -Hi cd.) 150. 

(t) Tlie law is with rpspcct to hilh of c-.xchaimi- See 
pw<i, p. 324. '■ ■ 

{u) \yigan v. t'mjlL^li and Srotli/<h A.^turaiicc A'l^miiiliui,, [lUOUJ 

(r) Possibly this is no exception to the jjeneral rule ; h promise to 
pay may be implied, and the £10 may be evidence of what would be 
the proi)cr sum (Utrwnrl v. Cniiif, [1802] I Ch 115 ) 

(//) Fliyht V. lictd (183l>), 1 H. & (;. 703. Formerly under tin.') 
rule an infant, on coming of aj.e, might give a valid promise to pay 
ins old debts. But now see the InfauU" Relief Act, lSV4, post ]> -J-' 



8ome airreements are unenforceable ; some are merely 
roidahk or subject to repudiation at the option of one 
oi the parties. Such are contracts obtained by fraud, 
which may in certain cavSes be set aside by the party 
defniuded (2). Other contracts are absolutclv void. 
i.e.. tliev are altoi^ether destitute of any le^al effect. 
The latter class includes illeqal contracts or such as 
havinir all the ])roper characteristics of a contract, the 
court will not enforce, «'ither becaiise they offend 
against public policy, or because some statute forbids 
their enfoicement. It is important to bear in mind 
that void contracts are not necessarily illeual, and that 
illeiial contracts are not necessarily criminal. When 
the contract is ilUgnl the court will of its own motion 
refuse to enforce it, even though the illegality has not 
been pleaded by the defendant (a). 

The presumption is in favour of validity, and every 
contract is considered valid unless it falls within some 
of the classes mentioned below ; if there is any serious 
<l()ubt. the court inclines rather towards supporting 
than towards upsettiuij an agreement. This is especially 
the case as regards contiacts which are attacked as 
l»eing contrarv to public policy— /.f., .such as it is 
deeiiit'd impolitic to At one time the 
tendency was to avoid many agreements on this ground, 
but th ' modern tendency is the reverse. The limits of 
the «loctrine of public jjolicy have now been .settled by 
the House of Lords in the case of Jnnsoii v. Dricjovt-ein 
Consolidn'cd Mines. Limited (b). .V judge is not at 

(,) .See fio.^f. \). loo. 

(I,) Sroti V. liroicn. [\m-l\ 2 g. H. 724. 

('0 !l!M»2| A. «'. 4S-I. 

^2 General View of the Law of Contracts. 

liberty to dfclare a contract to be contrary to public 
policy ininely because in his view it is inexpedient. 
The chiss of prohibitiid contracts must be trc^ated as 
defined and ascertained, and no court can invent a new 
head of public policy. " It is always an unsafe and 
treacherous ^jrotind of legal decision " (c). In Printing 
and Numerical Co. v. Sampson {d), Jessel, M.R., said, 
" You have this paramount policy to consider— that 
you are not li-htly to interfere with the freedom of 

The common law rule is. Ex turpi causa nan oritur 

actio. A contract for an object in itself innocent may 

be void if an iHci-al or inuuoral purpose is intended. 

Thus in Cannan v. Br>/C€ (e). plaintiff lent defendant 

money to pay for losses on illegal stock transactions, 

and .Vbuott, C.J., said, " It is impossible to say that 

the luakini,' such payment is not an unlawful act ; and 

if it be unlawful in one man to pay, how can it be 

lawfid for another to furnish him with the means of 

payment ? " Ho where a brougham was supplied to 

a prostitute, and the evidence showed that tlif^ pavment 

to be made was iK.t to depend upon amounts earned, 

yet that the lender knew of the inmioral object witli 

which the carriage was hired, the court declared the 

contiact illegal (/). Auiongst contracts lecognised by 

the common law to be illegal are : agreenumts of 

an inmioral nature \>'.g.. a promise of marriaue made 

bv a |».Msun win. is already married to the knowledge 

ol the promise.- camiot in general be enforced aftt^r the 

(' ) I'lr 1.111(1 DaVKV, ihiit., at p. TiCHI 

('0 (IST.-.), 1!» l':.|. 4»)2. 

(0 (18l!t), ;! li. & Alu IT'.i. 

(/) /'.-nr, V. /,Vw,/-.s (iMi(i), L. h I K\. I'l;!. 

Contracts wfiich the Law will not Enforce. 23 

death of the spouse (<;)], agreements to commit a crime 
or a civil wrong ; contracts for the sale of public offices ; 
(lontrarts whereby a person imdertakes for reward to 
UHe his position and influence to obtain a benefit from 
the Government {h) ; trading with an enemy (i) ; 
contracts impeding justice [e.g., taking money to stifle 
a prosecution (k),] and contracts in fraud of the Revenue. 
Marriage brokagti contracts are illegal, whether the 
object is to bring about a marriage with a particular 
person, or to introduce a number of persons with a view 
to marriage with one of them (1). An agreement with 
newspaper proprietors to suppress comment is illegal, if 
it is not ccmsistent with the proper conduct of the 
newspaper in the public interest (m). Certain contracts 
in restraint of trade and contracts involving maintenance 
or champerty are also unlawfid. 

(Contracts in Resiniinl of Trade. — A contract in 
restraint of trade is one which restricts a person from 
freely exercising his trade or profession. Where the 
lostraint is not general, it may be limited in one or 
more ways, as by prohibiting the exercise of a trade for 
a lUjfmite time, or within a certain radius, or with 
piU'ticular })er8ons. Thus, a covenant not to exercise 
the trade of a baker within the parish of St. Andrew's, 
Hulboiu, for live years, is limited as to space and 
til no. 

A ( niitract in general restraint is one which prohibits 
the exercise of a trade throughout ihe kingdom, and 

(<l) IViho/i V. Carnlei/, [VMH] I K. B. 72'.t. 

(A) v. Motor ('omi>onnits Co., [1918] 2 K. B. 241. 

(/) FMs V. Bdl (ISOO), 8 T. K. rAH. 

(/.) William.^ V nai/le;/ {M\t\), [>. K. I II. L. 2(M». 

(/) Jfi,/iiaii,t V f haritxuwlh, [I!)0»>1 2 K. B. 12;J. 

I/h) .\''rilh V. Jiominion ofCnnwia AVf-t Co.. [Hilfij U K. B. r>r)(l. 


such a contract was forniprly retjardetl as ipso fnrto void. 
This distinction cannot now be considered as universally 
applicable, but the law will not permit any one to restrain 
a person from doinj^ what his own interest and the public 
welfare require that he should do {n). However, the 
chantred conditions of modern commerce have involved 
correspondinj; changes in the views of judges as to what 
is, and what is not. contrary to the public interest, and 
accordingly in a very special case a restraint unlimited 
in area (tr unrestricted as to time will be upheld (o). 
The true test is whether, in view of all the facts, the 
restraint imposed is reasonable and necessary for the 
protertiou of the party intended to be benefited, and 
then, if not otherwise injurious to the public interest, it 
will be valid (o). The nature of the contract nmst be 
regarded, for a much wider restraint will generally be 
justified to })rotect the goodwill of a business for which 
a full roiisideration has been paid, or to guard against 
tht' divulging of trade secrets, than would be lawful in 
the ordinary case of master and servant (o). Questions 
of restraint of tiade usually arise in connection uith 
contracts between master and servant or the vendor and 
|»urchaser of a business, but any other kind of contract 
may offend against this head of public policy. Thus, an 
agreement between manufacturers to control the market 
in a particular commodity, by restricting output, 
limiting sales and fixing prices may be illegal if it is 
unreasonable as between the parties or injurious to the 
public, but such a contract to regulate supply and keep 

(n) Best, C.I., in Uomir v. Ashford (l»2it), 3 Bing. 320. 

(o) Xorduifill V. Mitriiii. Xordrnfilt Co., [I8it4] A. ('. S.'J.'i ; Ma.son 
V. Profidmt <lothl„'j and Siippli/ Co., [1!)131 A. ('. 724; Jhrbcrt 
.Mi>rrii, Lid. \. Saxdhij, \\\)h\\ A. ('. (i88. It is for i\\c judge, and 
not ttic jury, to <lcci(lc as to th(> roasonabloncss of tho rontract. 
Doii'doi ii'i'l I'uok-. I.ld. V. V(M,k. I l<M»t! I K. B. 4.'".. 

Contracts which thk Law will not Enkorck. 2.'» 

up prices is not necessarily injurious to the public, 
litM'ausfl au ill-re^uIated supply and unremunerative 
pricas may be more disadvantageous (p). Even the 
ptirson for whose benefit a restraint is imposed may 
ul>ject that it renders a contract ilieual (q). 

All contracts in restraint of trade, even thouf^h 
under seal, require consideration to support them (r). 
TIkj terms of these agreements are divisible, and, if 
itivJily separable and not part of the main purport and 
siibstiince of tlie clause, those which may be carried 
cut are not deprived of effect by those which are 

A contract in restraint of trade is part of the uood- 
will of a business, and for this reason is treated as 
;'iiable in the absence of any special provision to the 
tniitiary ; it accordingly passes with the goodwill so as to 
'iKilde the purchaser to enforce the contract in his own 
ii;tiiie (/). If a C(mtract of service is repudiated on the 
|»iirt of the master by the wrongful dismissal of the 
I Tvaiit, the latter is no longer bound by a clause 
!estiittive of his right to trade («). 

doiitracls inmloing Maintenance or Champerty. — 
^liiiutenance " is when one officiously intermeddles in a 

I//) .\urlh W'cMini Sail Co. v. Electrolytic Alkali Co., 111)14] 
A <•. 4()0, per Lord Haldane ; Kimis and Co. v. Umthcole, [1918] 
1 K. H. 418, ('. A. 

I'/) Evans and Co. v. Heathcote, supra. 

ir) See Mitchel v. ^tynoWa (1711), 1 Sm. L. C. (12th cd.) at p. 401. 

(V) Price V. Green (1847). 10 M. & W. 340 ; Baker v. Hedgecock 
il»SS), 3'J Ch. D. 520; Mason, v. Provident Clothing Co., [1913] 
A. (J., at p. 745, per Lord Moclton ; Goldsoll v. Goldman, [19151 

I ( 'h. 29l>, ( •. A. 

(/) .lacoby v. Whitmore (1883), 49 L. T. 335. 

('/) Gineral BillpoKting Co. v. Atkinson. [liMJS] 1 Ch. 537; [h>091 
A. (J. 118. The compulsury winding-up of a company i.s equivalent to 

II wruiifiiful dismis.sal {Measitni Rrnn., Limitexl v. 'Mmsuns, [19101 
-' fh. i'4S). 


26 General View of the Law of Contracts. 

I I 

suit (Itipoiidinji; in any court, which no way l)oh)ng8 to 
liim. by niaintainini^ or assi>tini; eithor party with 
mont^y or othorwiso, to prosecutft or defend it. Cham- 
perty is ... a bargain by some person, with a 
phiintitf or defendant, to divide tlie hind or other 
matter sued for between them, if they prevail at law ; 
whereupon that person, who is railed the champcrtee, 
agrees to carry on the party's suit at his own 
expense " (.c). Taking a transfer of an interest in 
litiijation as security is mtt cliamperty. Moreover, 
maintenance is lawful where the persons maintaining 
have a lei^al (not a mere sentimental) interest in the 
subject-matter of the action (_y). And a supply of 
funds fairly and openly, and with an intention partly 
charitable, is not necessarily a<j;ainst the policy of the 
law (z) ; nor is a contract of indemnity {j;ivcn by a 
trader, acting in tlie legitimate defence of his com- 
mercial interests ; althou'.'h under the contract it may 
become necessary to provide funds for the defence of 
actions (a). 

lie who wronjifully maintains another in liti<iati(m 
is liable to an action for damages at the suit of the 
person injured, if special damage has been occasioned to 
the latter by tlie maintenance (b). 

(s) Cliitty, Contracts (l.'itli od.) p. (itiS ; and sen Ternics do l.i Lt-y, 
Co. i-itt. :$liS b; JliwIliiiKjh v. X, ,r<l,<i(il< (Iss:!), 11 (). H. I). 1. 

(//) See And'rso,, v. lUukliffe. flSoS), 28 i.. .1. t^. M. .VI \ (IS(iU), 
U!l L. .1. Q. B. 128 ; Ham Commir Coinkxt v. ('Iinmlcr Canto Moukerjtc 
(1877), 2 App. Ci\s. 181), 210; Giiif v. r/nor/ii// (l88!t), 10 Cli. D. 

(;) Ifarrtx v. //(/.«:o (188(i). 17 Q. H. D. 504; Mahasl. r v. Harm. -.,■<, 
[I8'.t51 1 Q. B. :(:{!». 

{a) liritixh C't»</i and Pared Conrc/ors v. f.awxnn Ston Surii'r Co., 
[l!M>HJ I K. B. KMWi. 

(/j) .Kirillc. V. Ijtndon " Kxprexn" Xnr^paprr, Ltd, |l'.ll!l| A. C. 


Contracts which the Law will not Enforce. 27 

Statutory Provisions. 

(Joiitiarta lorhiddon by statutes cannot bo enforced, 
wliether they are forbidden expressly or ini[)liodly. A 
question freqiiontly arises whether a piven act is for- 
bidden by a statute or not. One nde has been laid 
down thus : if Parliament aS\xvn a penalty to the com- 
mission of a given act, it does not forbid that act if the 
penalty is inflicted merely for revenue piirposes — e.g., 
penalty for not takin^^ out a licence to sell tobacco (c) ; 
but if the act is forbidden for the protection of the public, 
the contract is illeual ((i). 

The followin<4 are cases of contracts made void by 
statute : 

(a) Gaming and Wagering Conlracts. — By the Gaminp 
Act. 1845, s. 18, " all contracts or aureements, whether 
by parole or in witing, by way of gaming or wagering, 
shall be null and void ; and no suit shall be brought or 
rtiaintaincd in any court of law or equity for recovering 
any sum of money or valuable thing alleged to be won 
upon any wager, or which shall have been deposited in 
the hands of any person to abide the event on which any 
wager shall have been made." Securities deposited with 
a stockbroker to secure payment of " differences '" in 
favour of the broker are not within these words, and may 
be recovered from the stockbroker (e) ; but not money so 
deposited if it has been appropriated to losses, because 

(r) Johnson v. Ibidson (180!»), 11 East. 180. 

((/) For a further test, see Cope. v. Kowlatuh (\S•.M^). 2 M. & \V. 14<», 
in wliieh Paukk, I?., said that if the .statute is intended to forbid the 
act, the question of revenue p\irposc or non-revenue purpose could not 
affeet the matter. See also Viclorian Dai/te.sford Syndicate v. Dott, 
1 liKKI] 2 Ch. (124 ; WhitnTwn v. Sadler, [l!»10] A. (!.. at pp. 525. 533 

<t Hfq. 

(.) V„iv(r.-<(d Stork E.rchnujc v. Sirarhnii, |l8it<i| A. ('. !(;<;. 




Oenrral View ok the Law of Contracts 

that is equivalent to a vtiliintarv payment witli kiiow- 
le(ij,'e c»f the fact8(/). Money deposited with a stake- 
holder to abide the event of a wa<,'er tnav he recovered 
if its return is demanded l)efore it has been paid over t«> 
the winner {(/). 

" The essence of <{arniu^' and wa<j;ering is tliat one party 
is to win and the other to h)se upon a future event, which 
at the time of the contract is of an uncertain nature— 
that is to say, if the event turns (tut one way A. will lose, 
but if it turns out the other way ho will win " (h). To 
mercantile men, the importance of the statute lies in 
the ert'e(;t it may have on Stock Kxchai\i^e transactions, 
which are specially dealt with in the chapter on that 
Hubjoct (i). 

Gaming and wagering contracts are void but not 
illeyal (k) : no offence is committed in making a wager, 
but the courts will not enforce the contract. Thus it 
will be entirely at the opticm of the promisor whether 
or not he pay the debt ; he may do so if he likes ; if he 
does, the money cannot be recovered. It w<ndd follow 
from this, that if an agent be employed to make the bet, 
the principal cannot set up the statute as a defence to an 
action by the agent for money paid in respect of a loss ; 
the agent could sue on the implied contract to indemnify 
him in regard to moneys properly expended for his 
principal, as there is no violation of the law in paying 
bets at the request of the principal (/) ; and until the 

(/) Strachan v. Universal Stock Exchange, [1895] 2 Q. B. 097. 
(g) Hampden v. Walsh (181G), 1 Q. B. I). 189. 

(h) Thacker v. //arJi/ (1879), 4 Q. B. D.. at p. (39.'., per ( utton, L.J. ; 
and see Richards v. Starck, [1911 J 1 K. B. 290. 
(i) See fiotil, pp. 529, S.'iO. 
(k) See Saxinj v. Fulton, [1909] 2 K. B.. at p. 227 : /nr Blckley, 


(/) Read V. Anderson (1884), 13 Q. H. D. 779. 


CJaniint; Act, 1892, hirIi was the luw ; but now by that 
Act it is pri>vi(ied that " any promise, express or implied, 
to pay any person any sum of money paid by him under 
or ill respect of any contract or agreement rendered null 
and void by the [Gamini; Act, 1845], or to pay any sum 
of money by way of commission, fee, reward, or otherwise 
in respect of any such contract, or of any service in rela- 
I iou tiiereto or in connection therewith, shall be null and 
\<»i«l, and no action shall be brought or maintained to 
lecover any such sum of money." But this statute does 
not enable a person who has received money for bets made 
by him on behalf of another to retain it (m). 

Negotiable securities given in payment of bets on 
^'atnes and horse races, or for the repayment of money 
knowingly lent for gaming, are deemed to liave been 
given on an illegal consideration ; as between immediate 
parties they are unenforceable, but holders in due course 
may sue upon them ; the giver of the instrument being 
then entitled to indemnity from the payee (n). Although 
iiu)n«'y lent for the purpose of gambling in a foreign 
( ouutry, where the game in question is not illegal, e.g., 
to play roulette at Monto Carlo, may be recovered by 
action in England (o) ; if a negotiable instrument 
payable in England be given for the amount advanced, 
the security (and probably the debt also) will be bad (p). 

(b) Sales and Trading Confracts on Sundays. — The 
Sunday Observance Act, 1677, forbids trading in course 
(»f the contractor's ordinary calling, and contracts made 

(m) De Mattos v. Benjamin (1894), (>3 L. J. Q. B. 248. 
(«) See the Gaming Act, 1710, as ttniended by the Gaining Act, 
1835; Golding v. Bradlaw, [1919] 2 K. B. 238. 
(o) Saxby v. Fulton, [1909] 2 K. B. 208. 
(p) iloulia V. Owtn, [1907] 1 K. B. 746. 





1 2.8 



ill 4 


[ 2.2 



r^ste'. 'Je« vork '4609 

:f ■ -S^ - 0300 - P^one 
'•■,> 288 - ^989 - fa. 


Gexkral Vikw of the Law of Contracts. 

I ' 

on Sundays in the course of such trade are. Tvith certain 
exceptions, unenforceable. A bill of exchange, pro- 
missory note or cheque dated on Sunday is good'ij). 

(c) Leeman's Act (30 & 31 Vict. c. 29) renders void 
the sale of shares in a joint stock banking company, 
unless the contract sets forth in \\Titing the numbers of 
the shares as stated in the register of the company. 

(d) Contracts contravening the Money-lenders Act, 
1900.— See jtost, pp. 71. 72. 

(e) Registration of Busimss Names Act, 1916.— Any 
person wii.j fails to comply with the requirements of this 
Act in relation to a business carried on by him carmot 
enforce by action any business contract made or entered 
into by or on his behalf at any time while he is in 
default (r). But the title to property of which the 
defaulter has obtained complete possession is not 
affected {s). 

Effect of niegalUy.—A.^ a rule, illegality avoids the 
whole contract ; but if there be an independent stipu- 
lation, the exercise of which would not affect the agree- 
ment as a whole, the illegality of this stipulation" will 
not avoid the whole contract. " The general rule is, 
that where you cannot sever the iUegal from the legal 
part, the contract is altogether void ; but, where you 
can sever them, wiietlier the illegality be created by 

{(/) iJillaof Kxchaiigw All, I,S,S2. .s. 13. 

ri'liof auainst tlic disa l.ilitv Uy 1 1„. ^^.^^ io„ 
{«) Dauid V. lio<ju6, [1<J18J -2, K. Jj'. 2:J8, C.A. 

Capacity to Contract. 


statute or by the common law, you may reject the bad 
part and retain the good " (0- 

Can money paid under an illegal contract be re- 
covered ? This will depend upon whether the contract 
has been executed or is still executory. In Taylor v. 
Bowers {u), Mellish, L.J., said : '" If money is paid, 
or goods delivered, for an illegal purpose, the person 
who had so paid the money or delivered the goods may 
recover them back before the illegal purpose is carried 
out ; but if he waits till the illegal purpose is carried 
out, or if he seeks to nforce the illegal transaction, in 
neither ease can he maintain the action." It has been 
decided that he cannot recover if the illegal contract 
has been carried out even partly {x). But the courts 
take a special view of marriage brokage contracts and 
will order repayment of money, even when something 
has been done in part performance of the contract, or 
even when the marriage has taken place {y). 

Capacity to Contract. 

Every person is presumed to have capacity to contract, 
but there are certain persons whose status, age, or con- 
dition renders them wholly or partly incapable of 
binding themselves by a contract — e.g., infants. In- 
capacity must be proved by the party claiming the 
benefit of it, and until proved the ordinary presumption 
remains. The incapacity may be such as to make the 
attempted contract null and void, or it may be such as 

(I) Mr. Justice Willies, in Fickerimj v. UJracombe Hail. Co. 
(181)8), L. R. 3 0. P. 235, at p. 250 ; cit<."d b^ CmxTV, J., in Baker v. 
Ucdgecock (1888), 31) Cli. D. 520, 522. 

(<() (1876), 1 Q. B. D. 201. 

(.i) Kcarlci/ v. Thompson (1800), 21 Q. B. D. 712. 

{ij) UcriiMiiii V. L'luirlcsworlli, LIOOOJ 2 K. B. 123. 

I ; 

32 General View ok the Law of Contracts. 

to render it voidable ; in the latter case the contract 
remains valid until the option to render it invalid is 
exercised by the person entitled to avoid it. 

Contracts with Infants. 

A person under twenty-one years of age is an infant, 
and as the law does not recognise fractious of a day-, a 
person attains his majority at tlie first instant of the 
day preceding his twenty-first birthday. Some con- 
tracts cannot be validly made by an infant. Bv s. 1 f 
the Infants' Relief Act, 1874, " all contracts, whether 
by specialty or by simple contract, henceforth entered 
into by infants for the repayment of money lent or to be 
lent, or for goods supplied or to be supplied (other than 
contracts for necessaries), and all accounts stated with 
infants, shall be absolutely void : Provided alwavs, that 
this enactment shall not invalidate any contract into 
which an infant may, by any existing or future statute, 
or by the rules of common law or equity, enter, except 
such as now by law are voidable." This section, it 
will be observed, applies only to contracts relating to 
the sale of goods, the loan of money, and accounts 
stated (c). If an infant enters into any of these contracts 
the contract is absolutely void for all purposes ; even a 
mortgage of land belonging to an infant to secure ad- 
vances which the infant has expended in building on the 
land will be set aside (a). 

An infant ca not be made liable in respect of a contract 
which is void under the Infants' Rehef Act, 1874, in any 
form of action. Thus, if an infant induces a person to 
lend him money by fraudulently representing himself to 

(2) See Duncan v. Dixon (1890), 44 Ch. 1). 211. 

(u) Nottingham, etc. Building Society v. Thurstan, [1903 A. C. (i. 

Contracts with Infants. 


be of full aue, he cannot be sued for money lent, or for 
money had and received by him for the use of the lender, 
or for damages for fraud (b). 

The Betting and Loans (Infants) Act. 1892, makes 
absolutely void an agreement by a person after he 
comes of age to pay any money which in whole or in 
part represents, or is agreed to be i)aid in respect of, 
any loan which made to an infant is void ; and any 
instrument, negotiable or not, given in pursuance t»f 
such agreement is also absolutely void against all 
persons whomsoever. Such agreements are, however, 
only avoided in respect of money payable under tliem 
on account of such previous loan and will be valid to 
the extent of any new advance. 

At common law, an infant's contracts were voidable, 
not void (c) ; that is to say, unless the infant repudiated 
them, they were valid and enforceable against him ; he 
could always enforce them himself. The general rule 
seems to have been that if the contract was to be sus- 
tained, the infant must expressly ratify it on reachin*' 
full age. But there are certain classes of contract which 
are deemed to be adopted unless the infant expresslv 
repudiates them within a reasonable time (d) of reaching 
his majority ; and the infant's ignorance of his right t(» 
repudiate will not relieve him from the consequences of 
undue delay in exercising that right (e). WTiat amounts 
to a reasonable time is in each case to be determined on 
the particular facts (/). This latter group of contracts 

(/>) Lfslie {!{.), Ltd. V. iShcill. [1914] 3 K. B. tl07. 

(c) This is the general opinion. See Pollock on Contracts (8th ed ) 
]^). 50 et seq. '" 

{<!) Be Blakchj Ordnance Co. (180'.)), L. R. 4 Vh. ;$1 ; and Kbbelfs 
<:'«.< (1870). L.K. 5 rh. 302. ir.ootu,. 

(e) Carnell v. Jlurri.wn, [I'JltiJ 1 Ch. 328. 

( / ) Edivardx V. Carter, [ 1893| A. L'. 300, a n".airia^c scttkment ease. 



consists of those wliich arc incident to intiMosts in peiiiia- 
neut propoitv, and includes contracts of tcnai\cy, 
partnorslii)), contracts to take shares, and niarria<ie 
settlements. An infant who remains in partnersliip 
after attaining' hi^ majority will be held liable as a partner 
for debts accruini: after he comes of age. " If he wished," 
says Best, J., in a similar case, " to be understood as no 
longer contin\iing a partner, he ought to have notified 
it to the world " {g). An infant may hold shares in a 
company, and if when he becomes of age he does not 
repudiate them, he will be deemed to have ratified the 
contract to purchase, and will be liable to be placed on 
the list of contributories {h). If he make a lease and 
accept rent after coming of age (i), or if he continue 
to occupy under a lease (j), in either case he will be 
considered to have adopted the contract ; though, had 
Ih> wished to do so, he coidd have avoided the lease (k). 

The common law has, in this relation, been somewhat 
altered by s. 2 of the Infants' Relief Act, 1874. This 
section piovides that " no action shall be biought where- 
by to charge any person upon any promise made after 
full age to pay any debt contracted during infancy, or 
ui)on any ratification made after full age of any promise 
■or contract made during infancy, whether there shall or 
shall not be any new consideration for such promise 
or ratification after full age." This section is not limited 
to the cfmtracts mentioned in section 1 of the Act, e.g., 
mere ratification of a promise to marry is not binding (/) ; 

(g) Uoodc V. Harrison (1821), .') B. & Aid. IM. ItiO ; and sro ^nr 
I,t.r(i HERsriiKi.T. in Lovell v. Bdiiiihamp, 118!)4j A. C, at p. Oil. 
(A) Re Blakdy Ordnance Co . supro, p. 'X^ 
'.> Batilis V. /;,««/£// (181.-)), ;{ M. & S. 477, 481. 
{/) 1 RolU- Alsr, 7:U. 

(/, ) I'er (JnuiS, ('.,J.. in Ilohiits v. HUmJij (ISlS). S Taunt. .'iOH. 
(/) Coxhead v. J/»//<.s ( l8i>8), H (". R D. 43'.t. 

Contracts with Infants. 


nor does the 



md agreements 

'h contracts as leases, 
partnerships, and agreements to talco shares ; to these 
the ol(l law applies, and the infant who desires to get out 
of liability on tbeni must repudiate within a reasonable 
time of attaining his majority. 

There are two contracts of a nature similar to each 
other, which are allowed to be good even against an 
infant ; if taken as a whole, the agreement is not so 
much to the detriment of the infant as to render it un- 
fair that he should be bound by it (m) ; such are contracts 
of apprenticeship and service. The court, if satisfied 
that the contract is reasonable and for the benefit of the 
infant, will enforce its provisions even against him (n), 
even if the contract is executory (o) ; otherwise it will 
nf)t ip). If an infant's contract of service contains un- 
reasonable stipulations in restraint of trade and these are 
severable, the void stipulations may be rejected and the 
operative part of the contract, if otherwise unobjection- 
able, enforced (q). 

An apprentice cannot be sued on his covenant in the 
deed to servo (r), but a covenant for the payment of a 
fair and reasonable premium may be enforced against 
him when he comes of age (s) ; and so may a reascmable 
restrictive covenant not to compete in business after the 
cessation of the apprenticeship (t). 

r .i,??, 1*I^"o ^i' '" ^'^"''^'' ^- -'^o'"'"" ««'^ ^'orlh Wpslen, Hail. Co.. 
1 1H'.»4J 2 Q. B., at p. t)8. ' 

ill) Glemnits V. London and Xorlh U'eHcrn Rail. Co [18941 "OB 
4S2 ; Green v. Thompson, [1899] 2 Q. B 1 •, i ■ j - ><. . 

(o) JiolM'rt.s V. Gmtj, [1913] 1 K. B. 520. 

(p) De Francesco v. Barnam(WMi), 43 Ch. D. 1C5 : 45 Ch, L> 430 • 
Corn V. MaUhew.s, [1893] 1 Q. B. 310. ' 

(q) Bromkij v. Smith, [1909] 2 K. B. 235. 

(r) C'llbirl V. i'7d<-/aT{1630), Cro. Car. 179. 

(s) Walter v. Everard, [1891] 2 Q. B. 309. 

(t) Gadd V. Tftompson, [1911] 1 K. B. 304. 

;56 (teneral View of the Law of Contracts. 

If an infant carries on business, he is nut liable en 
contracts made bv him in the course ol' trade (u). 


Necessaries. — An infant is boiind by his contract for 
necessaries, if the price be reasonable (j). as thouj^h he 
wore of full aj^e. They include, says Coke {y), " his 
necessary meat, drinic, apparel, physic, and such other 
necessaries, and likewise for his good teaching or in- 
struction, whereby he may profit himself afterwards." 
Where goods are supplied to an infant they must be 
suitable to his condition in life and to his actual require- 
ments at the time of the sale and delivery (x) ; and it 
is for the plaintiff to prove that the infant was not 
sufficiently supplied with similar goods at the times 
in question (z). But he cannot be sued on a bill of 
exchange or promissory note, though it be given for 
necessaries (a). And though an infant can enter into 
a contract to pay for necessaries, he cannot be bound 
by a bond with a penalty, even though the consideration 
be necessaries supplied (6). 

The question whether a given thing is or is not a 
nacessary is determined as follows : Evidence is given 
— which may include proof that the infant was already 
duly supplied with the thing in question (c) — and upon 
this the judge determines whether the things supplied 
can reasonably be termed necessaries ; if he thinks the 
question open, he leaves the decision to the juiy ; if he 

(tt) Cower n v. XieM, [1912] 2 K. B. 419. 
(x) .Sale of Goods Act, 1893, s. 2. 
(y) Co. Litt. 172 a. 
(z) Nash V. Jn>mn, [1908] 1 K. B. I. 
la) In re SoUykoff, [1891] 1 Q. B. 413. 
{b) Walter v. Eeerard, [1891] 2 Q. B, 3ti«. 

(c) Barnes v. Toye (1884), 13 Q. B. i). 410; Johnstone v. Marks 
(1S.S7), 19 Q. B. D. 509 ; the Hale of Goods Act, 1893, s. 2. 

Contracts with Infants. 



has no doubt, he himself decides accordingly (Ryder v. 
Wombwell ((/)). The circumstances of that case were 
as follows : The defendant had £500 a vear, and an 
expectancy on coming of age, and lived with relations. 
He bought some jewelled solitaires, a jewelled silver 
smelling bottle, an antique goblet, and a pair of coral 
oar-rings. The jury found that the solitaires .-ind goblet 
were necessaries, but that the other articles were not. 
It was eventually held by the court that the plaintiff 
should have been non-suited, and the following iiiles 
were laid down : (1) That the judge must determine 
whether the case is such as to cast .in the vendor the 
onus of proving the articles to be necessaries within 
the exception, and whether there is sufficient evidence 
to satisfy that onus. (2) A thing is a necessary if it is 
requisite that an infant should have the article for the 
purpose of jnaintaining himself in his station. 
The following have been held to be necessaries : 

Livery for an officer's servant (c) ; 

Horse, when doctor ordered riding exercise (/) ; 

Goods supplied to an infant's wife for her 
support (flr). 
The following have been held not to be necessaries : • 

Goods supplied for the purpose of trading (h) ; 

Cigars and tobacco (i) ; 

Refreshment to an undergraduate for entertain- 
ing (k). 

{(l) (1868), L. R. 3 Ex. DO ; and on appeal (1869), 4 Ex. 32. 

(e) Hands v. Slaney (1800), 8 T. R. 578. 

(/) Hart V. Prater (1837), 1 Jur. 623. 

{g) Turnery. Trigbij {1119), 1 Stra. 168. 

(A) Thornton v. lUingworth (1824), 2 B. & C. 824. 

U) Brt/mit V. Richardson (1806), 14 L. T. (N.s.) 24. It wJl be 

served that this is an ancient decision. 

k) Wharton v. Mackenzie (1870), 5 Q. B. 606. 

38 (jiKNKRAi, View ok the Law of Contracts. 

I I 

Recovcnj of Money jxiid by Inj'atU. — Whether uii 
iufuut can rotovor money paid under a contract entered 
into Ity liiin which ho either avoids or wliicli per se 
is void, depends upon circumstances. In ValetUini v. 
CuiKili (/), the contract was partially within s. 1 of the 
Infants' Kclief Act, 1874, and to that extent void. The 
infant had hired a house, and had bou<;ht the furniture 
in it ; he paid part of the price for the furniture, and 
had occupied the house and used the furniture for 
several months ; the court held that the infant was 
entitled to have the contract set aside ; but, having 
used the furniture, he could not recover the money 
already paid under the contract. In Corpe v. Overton {m) 
the infant paid the defendant money in view of an 
intended partnership, but the partnership was never 
entered upon, hence the court ordered the defendant to 
return the money. In Hamilton v. Vaughan-Sherrin 
Elcclrical Engineering Co, (w), an infant shareholder was 
allowed to recover moneys paid on application for the 
shares and allotment, but no dividend had ever been 
paid, nor had the shareholder attended or voted at any 
meeting. Stirling, J., said that in determining whether 
an infant can recover money paid under a repudiated 
contract, the test is to see if the infant derived any 
real advantage from the contract ; if he did, the money 
cannot be recovered. This accords with the authorities 
— e.g., Holmes v. Bhgg (o), wherein it was proved that 
an infant had occupied premises under a lease which he 
afterwards repudiated. In consequence of such occupa- 
tion the court refused to order the lessor to refund a 
premium already paid by the infant. 

(0 (I8i»0), 24 Q. B. D. 100. 
Im) (1833), lOBing. 253. 

(n) tl8!>ij 3 Oh. 589. 
(o) (1818), 8 Taunt. 508. 



Jidulcruptrif of Infant. — It lias nover Wen aettled 
wliotlu!!' an iiifjuit can bo wnida a Wankruiit ; il he can, 
the hahiUty in reH|)ect of whi<li the petition in filed 
must have been incurred for a neceasaiy, or the debt 
nnist be due under a judgment for an unliquidated 
demand ariainj,' otherwise than on contract (p). The 
Court of Bankruptcy may in([uire into the validity of 
an aliened debt, and consider the plea of infancy 
although judgment has been obtained (q). 

Contracts with Married Women. 

I. Contracts before Marriage. — At common law the 
wife was liable to be sued on contracts entered into 
before marriage, but so also, during the coverture, was 
the husband (/). The liability of the husband is now 
limited to the extent of any estate or property which he 
may acquire in right of his wife, and a creditor, seeking 
also to make the husband liable, may sue husband 
and wife jointly upon such contracts (*). The liability 
of the wife for her ante-nuplial debts is a personal 
one {t). 

II. Contracts during Marriage.— At common law a 
married woman had no power or capacity to contract, 
so as to sue or be sued, either with or without her 
husband, on contracts made by her during coverture (u). 

(p) Kx parte Jones (1881), 18 Ch. D. 109; Williama' Bankruptcy 
(11th ed.), p. 35. 

(q) Ex parte Kibbk (1875), L. R. 10 Ch. 373. 

(r) See per Lindlky, L.J., in Beck v. Pierce (1889), 23 Q. B. D., 
at p. 320. 

(») Married Women's Property Act, 1882, aa. 14, 15. 

(t) Robinson v. Lj/ne-i, [1894] 2 Q. B. 577. 

{ii) There were cxeoptiona, whicJi are no longer of practical import- 



!<• (iKNKKAl, ViKW u|. IHK li.WV «iK CONTRACTS. 

Ijtv.'islatitiii liiis i^ltecttMl i;rouf. thiiiiL^f-i in llii^ l.iw 
relating Id married woiueu, and their status is now 
iiminly governed l>y the Married Wumoir.s Property 
Act, 1882, us amended by the Act of 1893. 

Modern Law Ctoveming the Position of Married Women. 

The Married Women's Property Act, 1882, affects 
those married after January 1st, 1883, and tliose 
married hefor<^ tliat date as respects property acquired 
after 1882. Its main provisions, as supphMiionted by 
tlie Act of 1893, are : 

(i) A married woman shall be capabh) of acquiring, 
hoklinj;, and disposing (x) of property as hor 
stsparatc property and of contracting (y), as if 
she were a fetne sole, but to the extent of her 
separate property only and so as to bind her 
separate estate only (y). 

(ii) Contracts made after December 5th, 1893, and 
entered into by a married woman otherwise 
than as a^ent, are deemed to be with a view 
to her separate estate, both that which she has 
at the time and that which slie may thereafter 
acquire, so that she may bind her separate 
property which she is possessed of or entitled 
to at the date of the contract, and also that 
which she may thereafter acquire. On such 
contracts she may have judgment against her, 
though at the date of the contract she possessed 
no separate property ; further, the judgment 
may be enforced against property she may be 

(x) Section 1(1). 

(y) Section 1 (2). 

Contracts with Marrikd Womkn. 


posttestitid of after she liaa ceased to be a 
inurried woman (a), 
(iii) Settl«>ment8 made, whether before ^ or after 
marriage, are not interfered with by the 
Act (6), and rejitraints on anticipation are 
not affected by it, provided that no restrii- 
tion on anticipation in a settlement of a 
woman's own property made by herself shall 
have any validity against her ante-nuptial 
debts (c). 

It must be noticed that there is no remedy enforce- 
able against the married woman personalis ; the debt 
is payable out of her separate estate only, and only 
then so far as she has property free fron" restraint on 
anticipation {d). If a married woman in fact contracts 
as agent, her separate estate is not liable to answer the 
debt, although the other contracting party does not 
know that she is agent or even that she is a married 
woman (e). 

A judgment against a married woman should pre perly 
be expressly limited to separate property, not subjccL 
to any restrain! on anticipation {d), except where the 
restraint has been imposed on her own property by her 
own settlement (/). The death of the husband does 
not convert these limited judgments into judgments 
upon which she can be personally called upon to pay (g). 

(a) Married Women's Property Act, 1893, s. 1. 

(6) Section 19. 

\c) Ibid. ; an ' see Jay v. Robimon (1890), 25 Q. U. D. 467. 

(d) SaAt V. Morky (1888), 20 Q. B. D. 120; Sofllaw v. Wekh, 
tl899]2Q. B. 419. 

(e) Paquin, Limited v. Beauckrk, [190G] A. C. 148 ; sec also potl, 
J). 159. 

( / ) Married Women's Property Act, 1882, s. 19. 
(g) Be Hewelt, [1895] 1 Q. B. 328 ; Softlaw v. Wekh, aupra. 

t 2 


42 General View of the L. v of Contracts. 

There being no personal obligation to pay, a married 
woman cannot be committed on a judgment summons 
for non-payment of the judgment debt (A). A married 
woman cannot be made bankrupt unless she is carrying 
on a trade or business (i), but if she does so, whether 
separately from her husband or not, she can be made 
bankrupt, and she may in such case commit an act of 
bankruptcy by non-compliance with a bankruptcy 
notice, although not personally bound to pay the debt 
in respect of which it was issued (Jc). 

Restraint on Anticipation. — Property is constantly 
transferred to trustees upon trust to pay a married 
woman the income thereof, with a proviso that she shall 
not have power to " anticipate " it, and the effect of this 
proviso is that until the income becomes due, she has 
no power of disposing of it, and cannot make it suuject 
to her debts ; hence a judgment creditor cannot attach 
or otherwise take such property in execution. If, how- 
ever, judgment is obtained against her at a time when 
the income is due, though not yet paid over to her, the 
judgment creditor is entitled to take it in execution ; if 
the judgment has been obtained, and afterwards the 
income becomes due, he cannot attach it in the hands 
of the trustees (1). 

Contracts with Lunatics and Drunken Tersons. 

A contract (except for necessaries) inatlc with a person 
who is insane and does not know what lie is doing, will, 

(h) Draycoll v. Uarrison (iSSti), 17 Q. B. D. 147. 
(i) Ex parte Conhon (1888), 20 Q. B. 1). 240. 
a-) Bankruptcy Art, I'JU. r.. 12r.. Soo further, po^^t. p. 539. 
(I) See llowi Burrs v. Ilcr^ot, [181)0J A. U. 174; Boblho <fc Co., 
LimiUd V. Gidlcy, [lOOoj A. C. U8. 

Contracts with Corporations. 


unless advantage has been taken of the lunatic's state, 
or unless the other contractinji party was, at the date of 
the contract, aware of the lunacy, hold good (wt) ; in 
other cases it is voidable. It may in any case be ratified 
when the lunatic recovers his senses. But a person 
found lunatic by inquisition, so long as the inquisition 
remains in force, caimot, even during a lucid interval, 
validly deal with or dispose of his property (n). 

A person who enters into a contract when in a state 
of complete drunkenness, so that he does not know 
what he is doing, may avoid such contract (o) ; but it 
remains good unless he does so {p). If the contract is 
for the supply of necessaries at a fair price, in the 
absence of unfair dealing, it is good {q). 

Contracts with Corporations and Companies. 

A Corporation is an artificial person created by special 
authority, and endowed with special capacity. It may 
consist of one person or of many, and in the former case 
is then known as a corporation sole (r). Coke says, " A 
corporation aggregate of many is invisible, immortal, and 
rests only in intendment and consideration of the law ; 
it has no soul, neither is it subject to the imbecilities of 
the body." The individuals composing the corporation 
are not liable for its debts, nor entitled to its property, 
and here will be found the main difference between it 
and an ordinary partnership. The rules of Roman law 
(in this point are applicable to English law, Si quid 

(in) Imperial Lwm Co. v. Stone, [lS\y2] I Q. B. 5itl). 

(h) In re Walker, [lii05| 1 Uli. 100. 

(o) Gore V. Oiftsow (1845), 13 M. & W. 02;{. 

(p) Maitlmvsv. Uorlrr (iHl-.i), L. H. H Ex. VM. 

(q) Gore V. Gikion (IH45), i;{ .M. & W., at p. (i27. 

(r) E.g., the vicar (jf a paiisli. 

i 1 

I i 

44 Gkneral View of the Law of Contracts. 

universitnti debetur singulis non debetur, nee quod debet 
universitas singuli debent, but on the other hand, Si quid 
societati debetur singulis debetur, et quod debet societas 
singuli debent. 

Companies (s), in some cases, are nothing but ordinary 
partnerships with peculiar privileges — e.g., the right 
to sue and be sued in the name of a public officer ; 
sometimes they are special creations entirely distinct 
from the individuals composing them (t). 

Contractual Capacity. — Corporations have but a limited 
capacity to contract, depending in each case upon the 
mode of its creation and the purposes for which it was 
constituted. But although the powers of a corporation 
must be ascertained by reference to its constitution, 
these are sometimes implied. Thus, a trading corpora- 
tion has, in the absence of express restriction, power to 
borrow money for the purposes of its business (m). 
Within the limits imposed it would seem that a corpora- 
tion has the same power to contract, subject to the same 
restrictions as a natural person, and that it can act in 
any matter of business in the manner in which an 
individual conducting the same kind of business can 
act (x). 

In the case of companies governed by the Companies 
(Consolidation) Act, 1908, no contract is good which is 
not authorised by the powers given in the memorandum 
of association (y). A contract made in excess of the 

(«) Companies governed by the Companies (Consolidation) Act, 
1908, arc dealt with j)oM, pp. 19!> ei aeq. 

(t) See In re George Newman <fc Co., Limited, [1895] 1 Ch., at p. 68.5, 
and the opinion delivered in Salomon v. Salomon d- Co.,[l 897] A. C. 22. 

(h) GtiKial Auction, dc. Co. v. Smith, [1891] 3 Ch. -132. 

{x) Breay v. Royal British Nurses^ Association, [1897] 2 Ch. 272. 

(y) See Aahbury Carriage Co. v. Riche (1875), L. R. 7 H. L. 653. 

Contracts with Corporations. 


powers given to the corporation or company is said to 
be ultra vires, and is invalid. 

In many cases, a corporation must contract under seal, 
or, at least, through an agent appointed under seal (2). 

In the case of non-trading corporations importance 
has always been attached to the formality of sealing ; 
but two classes of contracts have long been recognised 
as not requiring to be under seal. Such contracts are 
(i) those which relate to matters of small importance ; 
and (ii) those which relate to matters of frequent 
occurrence ; in which cases the convenience of dis- 
pensing with the seal amounts almost to a necessity. 
In Laivford v. Billericay Bural Council (a), the previous 
decisions were reviewed, and a third important excep- 
tion was established. When a contract with a cor- 
poration for work or services in respect of matters for 
the doing of which the corporation was created is 
executed, and the corporation has accepted the benefit 
of the work or services, it must pay upon a ctmtract 
implied from the acts of the corporation, notwith- 
standing the absence of a contract under seal. With 
regard to trading societies, all contracts made by them 
within the scope of the business are binding, though 
not under seal, and the power to contract by parol does 
not depend upon the magnitude or insignificance of the 
subject-matter, but upon whether or not the contract 
be for a purpose connected with the objects of the 
corporation (6). 

In some cases, when a contract has been partly 

(z) Church v. Imperial Ods Light Co. (1837), A. & E. 840. 

(a) [19031 1 K. B. 772. 

(6) Church V. Imperial Gas Light Co. (1837), ti A. & E. 84« ; 
Clarke v. Cuckjield Union (1852), 21 L. J. Q. B. 349; Suulh uf 
Irdaml Colliery Co. v. W(ul<lle (18^8), L. H. 3 C. I'. 4<)3. 

40 General View of the Law of Contracts. 

perforniod. tlio, absonre of a seal has been held to bo 
no bar to an action ; b)it it would seem that the part 
performance must be of such a nature as would entitle 
a party in equity to a decree of specific performance— 
i.e., it must be .nequitable that the party who performs 
should not have what he bar<iained for from the other 
partv. and it must be shown that damages woidd be 
inadequate to meet the ease. As to this, see Fish- 
mongers' Company v. liolwrtson (c) ; EccUsimticnl Com- 
wisftioner.f v. Mrrral {d). 

Ai;reements not under seal may be made by certain 
eorpoiations in accordarice with statutory powers. 

Mode of Contracting bjf Regiskred Companies.— The 
Companies (Consolidation) Act, 1908, as retiiards com- 
])anies dealt v.'ith by the Act. enacts as follows : (i) any 
contract which, if made between private persons, would 
bv law be required to be in writini; and under seal, may 
be made, varied, or discharced under the common seal, 
(ii) Tf the contract, as between private persons, required 
to be in writing? and signed by the parties to be charged 
therewith, it may b(^ made, varied, or dischariicd in 
writing;, and signed by any i)erson acting- under the 
express or implied authority of the company, (iii) If, 
as between private persrms, the ccmtract might be made 
by parol only, not reduced into writing, it may be made, 
varied, or discharged by parol by any person acting 
under the expiess or implied authority of the company (e). 
The making and acceptance of negotiable instruments 
by a company is referred to hereafter, at p. 312. 

(r) n843), 5M. &G. 131. 
(d) (1869).!.. R 4 E?c. I(i'2, 

(r) S"o rnin|)tinie.s (;iiiu.-,us i:uii.s»li.l;iU(in Ait, IM^), 
rcards contracts of companies within that statute. 

01, as 

Contracts with Bankrupts. 


Contracts with Bankrupts. 

A person who is made bankrupt is not incapacitated 
from contractin!2, but if while undischarged he obtains 
credit to the extent of £10 or upwards, or trades under 
a different name from that umhn- which he was adjudf^ed 
bankrupt, witliout informinu; his intended creditor that 
]w is an undis(har<^ed banknipt, or without dischising 
the name under which he was adjudged bankrupt, he 
will be liable to imprisonment (/). If a contract is 
entered into, and one of the parties is adjudged bankrupt, 
the rights and liabilities under the contract pass to his 
trustee {g) ; but the trustee may by disclaimer abandon 
the contract (A). Contracts retpdring the personal 
services of the bankrupt cannot be enforced by the 
trustee in bankruptcy against the other party unless 
the bankrupt is willing to render the services (i). The 
rights of the other party are : (i) to prove for loss 
sustained by non-fulfilment of the contract if the liability 
of the bankrupt be of a provable nature (k) ; (ii) in the 
case of a contract to deliver non-specific goods by 
instalments, to refuse to deliver instalments after the 
bankruptcy begins until he is paid for them (1) ; and 
(iii) he may apply to the court to have the contract put 
an end to, and the court may rescind it on terms that 
such party do pay damages to the trustee or prove for 
damages against the estate, or otherwise (w). 

( n Bankruptcy Act, 1914, 8. 155. , , ., ,u . . 

(«/) lb ill., 8. as ; this is subject to the exception that if the contract 
be one affecting merely the person of the debtor, e.g., to cure, it will 
not pass to the trustee. 

(h) Ibid., 8. 54. 

(») Williams' Bankruptcy (llth ed.), p. 240. 

{k) Bankruptcy Act, 1914, s. 30. 

(J) Williama' Bankruptcy (llth ed.), p. 2;{8. 

(;„) Bankruptcy Act, 1914, s. 54 (5). 

48 General View of the Law of Contracts 



. I 


An alien enemy is incapacitated durin«f the continu- 
ance of a war from contractinj:; with British subjects, 
and his power to sue or exercise rij^hts in relation to 
property in this country is suspended. But an aHen 
enemy may be sued durinij; war, and if sued, he may 
defend himself (/*). 

Foreifjn sovereigns and states may c(mtract, but the 
contract cannot be enforced aj^ainst them unless they 
consent ; tlie same applies to ambassadors (o). 

.-1 Ijanister cannot sue for his fees ; nor can a Fellow 
of a Colleife of Physicians, the Fellows of which are 
prohibited by byelaw from recoveriuif at law tlieir 
expenses, charges or fees (p). 

I I 

i I 

Rights and Duties under the Contract. 

The iirst point to consider is — Who may enjoy the 
rights, and who may be put under liabilities on the 
contract ? The general rule is clear, that only those 
who have entered into the contract are able to enforce 
it or liable under it (</). Thus, if A. agree with B. that 
C. is to have £100, C. cannot compel payment, nor can 
B., by contract with A., bind C. to do anything. There 
was f )rmerly some doubt as to the prevalence of this 
rule in equity (r), but this doubt has been removed by 
the decision in Eley v. Positive Government Security 

(») The Hoop (1709), 1 C. Rob. 196 ; Porter v. Frendenbcrg, [19151 1 
K. B. 857 ; RobKun v. Premier Oil d- Pipe Line Co., [1915] 2 Ch. 124. 

(o) Diplomatic Privileges Act, 1708. 

(/)) Medical Act, 1880, a. 6. 

Ul) Prii-e Y. Eask'n (18201. 4 B. & Ad. 4:{3. 

(r) Toiiihi: V. Melroitolihiu Wanhouniny Co. (1871), L. R. Ch. 


WRONapuL Interference with Contracts. 49 

Life Assurance Co. (.<?). A later case is that of Broivne 
V. La Trinidad, (t) ; it appears that an au;r('eniont had 
been entered into between B. and tlie trustee of an 
intended company, by which B. was to be appointed 
an irremovable director ; when the company was 
formed, this agreement was said to have been incor- 
porated in one of the articles of association, but it was 
held that even if that were so, the articles amounted to 
a contract only between the shareholders as a body, 
and that B. could not sue the company although he was 
himself a shareholder, as he had no agreement with it. 

It might seem that the case of contracts made by an 

agent is an exception to the rule, but this is not so. An 

agent is practically the principal ; qui fdcif per ulium 

facit per se, or rather we might say, facit ipse. This is 

dealt with later, pp. 144 et seq. 

But though no contractual obligation can be cast 
upon a person by a contract to which he is a stranger, 
yet a duty may be thrown oa him to respect it, and 
interference may subject him to liability (u). In 
Lumley v. Gye (x) a singer agreed to sing at a particular 
theatre, and the defendant, without legal justification 
or excuse, induced her to break the contract. The 
majority of the court held that an action woidd lie for 
procuring a breach of the contract. This principle 
is not limited to contracts of personal service {y). The 
decision in Lumley v. Gye underwent much criticism, 
especially in the celebrated case of Alhn v. Flood (z) ; 

(«) (1876), L. R. 1 Ex. D. 88. 

^l) (1887), 37 Ch. D. 1. 

(ft) As to " tr<»de disputes,'" sen ]mM, p. 51. 

(x) (1853). 2 K. & B. 210. 

(y) Temperton v. A'«.wt«, 1 1 8!»3 1 I Q. H. 715. 

(;) [18081 A. (J. I. 


11 I 

50 Oenkral View ok tiir Law of Contracts. 

but it must now be taken to have been riiihtly decided (a). 
To excuse interference the justification must exist in 
fact, and tiiust be founded on a riijlit equal or superior 
to that of the plaintifV. A mistaken belief in such a 
rijilit. however honest, will not ex(»nerate the defendant ; 
(rood faith and the absence of ill-will are not lawful 
justification or excuse (h). If, however, A. should sell 
the same chattel to B. and then to C, Ji. would clearly 
be entitled to put all legitimate pressure on A. to deliver 
the chattel to him, though this woidd involve a breach 
(»f the contract with C. But the justification need not 
be founded on the personal rights of the defendant ; 
it may arise from a duty which he owes to another. 
No satisfactory definition of what will constitute sufficient 
justificati(m is possible, and each case must be decided 
on its facts. The court will, however, have regard to 
the nature of the contract broken ; the position of the 
parties to it ; the grounds for the breach ; the means 
employed to prt)cure it ; the relation of the person who 
procures the breach to the person who breaks the con- 
tract ; and the object in procuring the breach (c). It 
is no excuse for preventing a person from obtaining or 
holding employment that it is done to compel payment 

of a debt (d). 

Tn what cases it may be wrongful (apart from con- 
spiracy) to induce a person not to make contracts with 
another, cannot be said to be very clear. It obviously 
cannot be wrongful, for the purpose of obtaining a 
person's custom, to induce him not to deal with another, 

(a) Qiiinn v. Lealham, [1901] A. C. 495. 
(6) lUcd V. Friendhj Hofidij of Stonemaso 

. i .itm^v, >iw< .^i, ^j Stonemasons, [1902] 2 K. B. 732. 
(cj GlcirtonjiiH Coal Co. v. South Wales ilincrs' Federation, [1903] 
2 K. B. .'")45, prr Homkr, L..T., at p. 574 ; affirmed, [1905] A. C. 239. 
" ((/) Oibhti V. National, Union, [1903] 2 K. B. 600. 

Wronortl Interference with Contracts. 51 

as this is an ordinary incident of Icsitiniato trads coni- 
pt'tition. But it is submitted that a ^'ratuitKUS inter- 
ference on the part of an individual with the intention 
i)f injuriri'i a person by preventinu; others from con- 
tracting,' with liiin would he an actionable wrong if 
(lainii'ic resulted (e). 

Trade Disputes.— By s. 3 of the Trade Disputes Act, 
1!)(>G, an mt done by a person in contemplation or 
furtherance of a trade dispute (/) shall not be action- 
able on the ground only that it induces some other 
person to ])rcak a contract of employment. This 
statutory protection only extends to cases where there 
is a trade dispute (/), either actual, impending or pro- 
liable ; and if the act complaino<l of be accompanied 
by threats or violence, the old counuon law liability 
remains untouched ((7). A trade dispute must be a 
dispute between employers and workmen or between 
workmen and workmen (/), and therefore a dispute 
between an individual employer and an association of 
employers will not be a trade dispute within the meaning 
of the Act, even though officials of a workmen's union 
choose to assist one side or the other {/«). No action of 
tort will lie against a trade union (i). 

Assignment of a Contract. — In many cases the con- 
tract may be assigned, and then its rights and duties 

(e) Sec Quinn v. Leailuim, mipra ; and cf. AUen v. Flood, supra. 
Seo also prr Romkr, L..f., in Gihlan v. National, etc. Union, supra. 

(f) The expression " trade dispute " is defined by s. 5 (3) of the 

(g) Conway v. Wade, [1909] A. C. 506 ; VaterUim v. Hyde, [1919] 

2 Ch. 129. 

{h) Larkin v. Loh^. [1915] A. C. 814. 

(t) 'rwile Disputes Act, I'JUtJ, 8. 4; Vuclur <i- Sons, IMl. v. Tendon 
S'Kifty of Compositor.'^, [1913] A. (J. 107. 

52 Qeveral View of the Law of Contracts. 



i^o with it accordingly. Such a.ssi<^ninent or dovohition 
may take place by operation of law, or by act of parties. 
Amongst assignments by operation of law may be men- 
tioned the a-ssiynment of a bankrupt's contracts to his 
trustee, of a deceased's contracts to his personal repre- 
sentative (k), and of covenants running with the land 
and the reversion. In dealinjj; with an assi«inment by 
act of party the assi«,'nment of rij^hts and the assessment 
nf duties must be separately considered. 

Assignment op Rights. 

Equ'Uahh Assignments. — ^Courts of equity always 
;Have effect to assirjnments of debts and other choses 
in action (1), and an assignment for valuable considera- 
tion is complete in equity as between the assij^nor and 
aasiffnee without the assent of, or notice to, the debtor. 
An equitable as.«ignment may bo created by any words 
which show an intention to transfer the benefit of the 
subject-matter. It " may be couched in the language 
of command. It may be a courteous request. It 
may assume the form of mere permissicm. The language 
is immaterial if the meaning is plain. All that is 
necessary is that the debtor should be given to under- 
stand that the debt has been made over by the creditor 
to some third person. If the debtor ignores such a 
notice he does so at his peril. If the assignment be 
for value, and communicated to the third person, it 
cannot be revoked by the creditor, or safely disregarded 

{k) These are exclusive of such as relate to purely personal servicer, 
rights, and liabilities {Baxter v. Burfield (1747), 2 Str. 12t)ti). 

(l) A chose, in action is a personal right of property which can only 
be enforced by action — as opposed to a chose in possensimi , viz.. a thing 
in actual physical possession. Thus a debt, shares in a company, and 
rights of action arising out of contract or tort, are all cliosos in action. 

^ I 

Assignment of Riohts. 


by the debtor " (»n). An assignment which does not 
comply with the requirements of the Judicature Act, 
1873, may be a good equitable assignment. 

Assignmenta under ihe Judicature Act. — At common 
law this could take place only with the assent of the 
ilebtor, or in accordance vrith the law merchant (n). 
So, unless the contract were one of a negotiable character 
(see fost, p. 56), the rights given by it could not be 
assigned ; to transfer these rights a new contract of 
a trilateral nature — frequently implied — was required, 
the result being a change of creditors. This may be 
styled a novation of the original contract. Now by 
the Judicature Act, 1873, s. 25 (6), it is provided that a 
debt or other legal chose in action may be assigned so 
as to entitle the assignee to sue in his own name, if (i) the 
assignment is absolute, and not by way of .rge ; 
(ii) the assignment is in writing ; (iii) notice in riting 
has been given to the debtor. 

The assignment is subject to any rights of third 
parties, and to counter-rights of the debtor {e.g., set-off), 
as it is expressed, is " subject to equities " which 


would have been entitled to priority over the right of 
the assignee before the passing of the Act. A claim 
for damages against the assignor arising out of the con- 
tract under which the assigned debt arises, is an equity 
which may be set up by way of defence in an action by 
the assignee for the debt (o). But if the assignor induced 

(«») William Brandts v. Dunlop Rubber Co., [1905] A. C, at p. 462, 
per Lord Macnaghten. 

(n) See remarks of Maetin, B., in Liversidge v. Broadbent (1869), 
4 H. & N. 603, 610. 

(o) ycwfoundland (Govt.) v. Newfoundland Rail. (1888), 13 A. C. 

54 (Jknkkal Vikw ok ihk Law ov Contracts. 

tlio (U'ftMulutit to entor iiitn the coutrivct l»y fruud and 
tlio latter is not in a position or <loos not cluim to roMtind 
it, th<! (Uil'onduiit rannot set ofV the damaj^fs lor fraud 
to which lie is entitled against tlie ussij^nor as an answer 
in whole or in part to the cjaiin of the ussij^neo (p). 

An absolute assignment of debts by way of niort^a^^e 
with a proviso for redemption is within the beneiit of 
the sub-section, whether ma<lo to scture a fixed and 
definite sum or a fluctuating balance of account (7). 
Future debts may be asai^^ued, but un undefined portion 
of future debts cannot be so dealt with (r). The 
ipiestion whether an ascertained par' of a debt can be 
assif^ned is the subject of conllictin;^' decisions, and 
must await settlement by the Court of A[)peal ; but 
{)art of a judument debt cannot be assigned so as to 
j^ive the assi<fnee a right to issue execution (»). 

An assignee may set off the assigned debt against a 
claim by the person to whom it was originally due (/). 

hi Torkitujkm v. MiKjce {u) the meaning of the term 
'■ legal chose in action " came U}) for discussion. It 
was held that the benefit of a contract for the sale of an 
interest in property could be assigned so as to entitle 
the assignee to sue in Jus own name for a subsequent 
breach of the contract to sell ; but that tlie assignee 
could not sue unless his assignor was in a position to 
do so. Probably the expression includes uU choses in 

(p) Slmlilnrt v. U uluii Trad,\\i\Vl\ 1 K. H. Isl. 

(7) IJiuiuiiii, lirothtrs v. Holm 1. 1011, llSDS] 1 Q. J{. Ttio ; Uuijlu., v 
I'lnii,}) lloiisr Hotel Co., [l'J021 2 K. I?. 1!M>. 

(/•) Joiu.s V. nuntphre'jK, [l'JU2| 1 R. \i. 10. 

(o>) Sfc Fumttr v. Baker, [I'JlO] 2 K. B. ti3ti ; Skippir and Tackir 
\. Ilolloicti/, lltm»| 2 K. U. (130. 

{/) lieniiilt V. Whilr, [lillOl 2 K. I'.. M'.i. 

(n) [1002 1 2 K. 15. 427 ; revorsed (in ai)|K'al widioiil (Icnilin;; lliu 
|)ipiiit (if law, tlu' Cmirt of Appeal lupldiiij; tiicrc \va« iiu Ijicaili of 
coiiuact by the tkfendunt, [i'J03J 1 K. U. (jl4. 

Assignment of Lights. 


action which wore {onnorly treato an assignable by u 
Court of Equity. The Hub-s«M:tion nuwt. howovor, be 
read with Buiue limitations, and it apparently would not 
apply to a rij;ht to nue for dauui^^es in tort (x). " The 
section relates to procfdure only. It does not enlarge 
the class of in action, the as.'^i^'nability of 
which was previously recognised either at law or in 
equity " (//). 

Contracts involving personal confuleme or ability 
cannot bo assigned so as to shift tlie burilen of the 
obligation. An artist cannot assign the benefit of a 
contract to paint a portrait because he cannot compel 
the contractee to a.tept the work of any other artist, 
whether better or worse, lu a contract for the sale 
of future goou.- tii credit, the buyer cannot substitute 
the credit of his a.ssignee ; nor can any contract be 
assigned so as to impose on either party a burden 
exceeding that which he contracted to bear. In such 
cases, however, the assignment is good between assignor 
and assignee, but any action must be brought in the 
name of the assignor, and he must be ready and willing 
to perform himself all personal obligations (2). But 
oven a contract for the sale of goods may be so personal 
in its nature as not to be capable of assignment («)• 

(x) Dawwu V. Llnut Northern and City hail. Lu., [lUOi;] 1 K. 1>. 
2t)U. The right to recover compensation under tlio LnndH Clauses 
T'ousolidation Act, 1S45, is a legal eho.-<u in action capable of assign- 
ment and not a claim to damages for a wront;ful act (ihid.). 

(y) l\r Cozen s-Haui)Y, L..I., in Talhiir/'l v. As.-ivcittial rurtlaiid 
Ciincnl Manufaciaras, [lilO^j '2 K. B., at p. (i7t>. See also p(r Lord 
LisDLEY, S. v., I 1»o:JJ a. C, at p. 41>4. 

(:) Tolhurst v. .[.isociatixl Portland Cement Mantifadurerx, (I'.tO^l 
2 K. li. t>«0; on appeal, [11)1):$] A. V,. 414. The House of Lords 
aflirnivd the deei.Hinn of the Court of Appeal on the simple i^rouiid 
that upon the true construction of the contract it was intended to be 

(u) Kcmv V. Uaersclman, LIUOOJ 2 K. ii. 0U4. 

56 General View of the Law of Contracts. 

Transfers of policies of insurance, shares in com- 
panies, debentures, etc., both as to the ri<?hts and 
duties thereunder, are dealt with specially by Acts of 
Parliament and Aiticles of Association. 

Assignment oj Duties. — A person cannot assign his 
obli,i,'ation to perform a contract of any kind so as to 
shift from himself the lial)ility for non-performance, 
although he may in many cases perform by the act of 
another. The exceptions to this are mainly statutory, 
but in case of contracts concerning land, certain liabili- 
ties run with the land — i.e., bind the owner for the time 
being. But the person to whom performance is due 
may consent to a novation creating a new contract under 
which the original contractor gets his release and the 
liability of another is substituted. 

A distinction must be drawn between assignability 
and negotiabihty. Negotiability implies (i) that the 
contract may be passed from hand to hand without 
notice of the transfer to the party under liabiUty ; 
(ii) that the bona fide transferee for value of a nego- 
tiable instrument holds it free from any defects in title 
which might have affected the prior liolder, and not 
.subject to equities. The law on this subject is dealt 
with in the chapter on " Negotiable Instruments." 

Performance of a Contract. 

Parties to the contract have, on the one hand, the 
right to have the contract performed, and, on the other, 
are obliged to perform. Performance should be com- 
plete, and according to the real effect of tlie agreement 
— e.//., an agreement to pay a sum of money is not 
performed by mere readiness to pay, the debtor must 

, i I 

Performanck of a Contract. 


^o t(i his ircJitor und oftcr to pay (b). Where no time 
foi- peiforniaucc is fixed, there is an implied under- 
taking that the performance shall be completed within 
a reasonable time, having regard to the circumstances 
of the particular case. Performance may be waived, 
and another metliod f>f performance substituted by 
mutual assent, in which case, if the creditor gets what 
ho bargains for, the new performance is a stitisfaction 
of the old contract. Thus, if a creditor agrees to accept 
services for money and the services are actually 
rendered, the old contract has been discharged by 
accord mid sntiajaction [c). A new contract, if made 
and accepted in discharge of the old liabilitv, may, even 
if unperformed, be a good accord and satisfaction, the 
creditor having his remedy for breach of the substituted 
contract {d). 

To an action for non-performance there are various 
defences, but these, as a rule, arise out of circumstances 
which are sufficient to avoid the arrangement, and will 
therefore be dealt with under " Termination of the 
Contract " — e.g., impossibility. But set-off is not of 
such a nature. That is a right on the part of a defendant 
to avail himself of a debt due to him from the plaintiff 
in extinction or reduction of the claim in the acti<m, 
and so to avoid the consequences of non-performance. 
Only liquidated demands can be set-off, and the debts 
must be due between the same parties and in the same 
right ; claims, however, that cannot be raised by way of 

(b\ Co. Litt. 8. 340 ; Cranky v. Hillary (1813), 2 M. & S. 120. 

(<•) There must be consideration for tlie new arrangement ; there- 
fore, a promise to pay a smaller sum instead of a larjier, is not good 
- atisfaction. See ante, p. lit. As to tliis subject, see Comyna' Dig. 
Accord. (H.) 4 ; Guud v. Chicsiituh (1S19), 2 B. &, Ad. 335. 

(d) Hall V. Flocklon (1851), 10 Q. B. 1039. 

58 General View of the Law of Contracts. 

.set-oH may j^enoraUy be made the .subject of a counter- 
claim. Such questions bekmg uither to tlie law of 
procedure than of contract. 


This may be defined as the performance of a contract 
by delivery of money or of some negotiable instrument. 
It may be of two kinds — either absolute or conditional 
— ■€.(}., A. owes B. £20, he may pay this in gold, or by 
bill ; if B. takes the gold or the bill in payment, this is 
full satisfaction ; if he takes the bill subject to its being 
honoured at maturity, this is conditional payment (e). 

Method of Payment and Tender. — A debtor is bound 
to seek his creditor (/), and cannot claim to take time 
until demand, has been made. This, of course, may be 
varied by special agreement, and then, in addition 
to the demand, the debtor is entitled to an allow- 
ance of a reasonable time to enable him to fetch the 
money (g). 

WTien money is tendered, the whole amount should be 
offered {h), without imposing conditions ; but a tender 
may be made utider protest, so as to reserve any right of 
the debtor to dispute the amount (t). A debtor who is 
always ready to pay and actually offers to do so in effect 
performs his contract, so that tender is a defence to an 
action if the money is brought into court. 

(c) Rohinmu v. Raul (1829), <» B. & C. 455. 

(/) Fesmrd v. Alngiikr (1805), 34 L. J. C. P. 120. 

((/) M-usscy V. tikulm (l«ti<J), L. 11. 4 Ex. 13. 

(k) Dixon V Clarke (1847), 5 C. H. 305 ; Colkm v. Goodwin (1841), 
7 M. & »y 147. 

(») ^•icotl V. Uxbridiji Rail. Co. (1800), L. it. 1 C. 1'. 5U0 ; Orccntvood 
V. Sulcliffe, [18921 1 Ch. 1. 

Paymknt in Satiskactiox. 



The amount mvst be tendered in a manner consistent 
with the Coinage Act, 1870 {k), in accordance with which 
the following is legal tender — (i) gold coins, which have 
been issued by the Mint, up to any amount ; (ii) silver 
coins not over forty shilUngs ; (iii) copper coins nv.u over 
one shilUng. By the Bank of England Act, 1833, s. 6, 
Bank of England notes are legal tender for all sums above 
five pounds, if the notes are payable on demand to bearer, 
so long as the bank shall continue to pay such notes in 
legal coin. But Bank of England notes are not legal 
tender in Ireland (I) or in Scotland (m), though their 
circulation in those countries is not prohibited. The 
Currency and Bank Notes Act, 1914, s. 1 (1), makes the 
Treasury currency notes for one pound and ten shillings 
legal tender in the United Kingdom to the same extent 
as sovereigns and half-sovereigns. Country notes are 
good tender only with the assent of the creditor, and 
payment in country notes is treated on the same footing 
as payment in bills or notes in general (n). Further, 
the exact amount must be produced, as a creditor 
cannot be compelled to give change (o). But in all the 
above examples the creditor may waive his strict rights, 
and on slight evidence uncontradicted by other facts 
the courts would probably infer that he had done so— 
e.g., a debtor otfered to pay in country notes ; the creditor 
objected on the ground of insufficiency of amour t only ; 
it was held that here the creditor waived his right as to 
the quality of the tender (p). Again, though the debtor 

(k) Coinage Aut, 1870, a. 4. 

{/) Bankers (Ireland) Act, 1845, s. fi. 

(?/») Bank Notes (Scotland) Act, 1845,8. 15. 

(ii) Lichfield Union v. Greene (1857), 1 H. & N. 884. 

(n) Robinxon v. i^-mL (ISKi). •> Taunt. i'S*\ 

ip) I'olglasa v. Oliver (IS'il), 2 (Jr. & J. 15. 


(Jk.vkrai. VrKw ok thk Law ok Contracts. 

must actually pinduco tjio moiu'.v, if the cKiditur says, 
" Do not produce, it ; 1 will not tako it if you do," the 
tender will be j^ood (q). 

If payment be made in accordance with the direction 
of the creditor, the debtor will not be liable if the 
money l)e \ost~e.ff., a creditor sometimes directs 
Ins ilcl)tor to pay into a c;!rt.ain bank ; if after the pay- 
ment the bank fails, the debtor is discharj,'ed as fully as 
if he had paid the money into tlie hands of the creditor 
himself (r). If a debtor s expressly or impliedly 
requested or authorised by his creditor to make a payment 
through the post, then although the money may be lost 
in course of transit and nevei reach the creditor, it will 
amount to payment. So where a company is autho ,, ;d 
or directed to send a dividend warrant by post, the 
stockholder cannot sue for the dividend, if tjie warrant 
has been lost in the post (*). But apart from special 
directions a request to remit money through the post 
only authorises the debtor to do so in the manner in 
which a prudent person would make the remittance in the 
•ndinary course of business, and the sending of a large 
sum in Treasury notes, which were stolen before they 
reached the creditor, has been lield not to discharge 
the debt (0- A request by the creditor to remit through 
the post will not be inferred from a mere practice between 
the parties to make payments by cheques in that way (m). 
Moreover, the debtor should be careful to carry out 
strictly the directions given ; thus, if asked to send by 

(V) Doiiijlas V. Valrnk (1789), 3 T. R. ()83. 

(/•) Eylcs V. A7i4,v(l827), 4 Bing. 112. 

(.s) Thaidu.,l v. (!ra,i Sorthcrn Rail. Co., [llllO] 1 K. B. f)0<J 

(l)Mitchdl-Ha,rij v. Norwich JJfe Insurance Co., |i!»181 2 K. B. 

{It) I'eiiniiKjtoii V. Croislty d: Sou (1897), 77 L. T. 430, 

Paymknt in Satisfaction. 


post, he should not send by commissionaire (r). AL'aiu, 

where the deht< 




^ives an order on a tnira person 
pay to the creditor, the payment is complete if the 
creditor, without consultinti the debtor, arranu*; special 
terms with the third party, and in consequence loses the 
money (y). The following are e.xaniples of payments 
which are <i;ood, though not made in the usual way : 
numey paid by consent of the creditor for his benefit 
by the debtor {z) ; payment in ;i,'oods according to 
agreement (a). 

A payment is made, and nnist be accepted, according 
to the wish of the payer (6), and if m(mey be sent xipon 
express terms, the creditor will, in the absence of strong 
evidence, be estopped from repudiating the terms upon 
which it has been paid. In Day v. McLea (c), a creditoi' 
received a cheque " in full of all demands," and accepted 
it " on account,'' and it was urged that lie was estopped 
from denying it to be a full payment, but the court 
held that the question was one of fact, and that no pre- 
sumption of law existed adverse to the creditor. 

Payment by Bill or Note. — Apart from agreement 
the creditor cannot be compelleil to take, nor the debtor 
to draw or accept, a negotiable instrument in payment, 
If a bill or note is taken, then in the absence of sti])ula- 
tion such payment is presumed to be conditional, and 

{x) Hawkina v. Kutt (1793), Peakc, I8ti. 

(y) Smith v. Frrrand (1827), 7 B. & G. 10, 24. 

(2) WaUer v. Andrews (1837), 3 M. & AV. 312. 318. 

(a) Cannun v. H'ocxi (1836), 2 M. & W. 40.">. 4(i7 ; but see the TriK k 
Act.s, 1831 — 18'J(>, as resrards workmen. 

(6) See remarks of the judges in Crojl v. Lauthy, r> K. iV K. ti4!<, 
{>80, which, however, relat« more particularly to apjjroiiriation of 
pa\ inents. 

(c) (1889). 22 Q. R. 1). (HO. Cf. Uiiwhand P,nnn„rh,u'd v 
Temylr, (191 1 | 2 K.. li. 330. where an amount ii-.^s than iIh> (iii.t j ,iui 
by a third person was held to discharge it. 

62 General View of the Law or Contracts. 

i I 


: I 

if tlie instrument is not taken up, tlio oriuiiial liability 
revives (d) ; while, if the bill is met, the payment relates 
back to tlie time when it was i^iven (e). If a buyer 
offers cash, but the vendor prefers a bill, the pavnient is 
absobite, and all rii-lit of action upon the ovitiinal con- 
sideraticm i^oes and the vendor must sue on the bill (/). 
If, owin<; to the uegliiicnce of the creditor, the nejiotiable 
instrument becomes valueless, the payment is treated as 
an absolute payment— e..^., if a holder indorses a bill to 
his creditor by way of payment, and when the bill in 
dishonoured, the creditor fails to uive proper notices 
of dishonour, and thereby releases the diawer and in- 
dorsers (g). U a bill wliich has been receivcil by way 
of conditional payment {e.g., for the price of i^oods) is 
dishonoured, the creditor may sue for the price, but 
the bill must be in his hands at the commencement of 
the action, otherwise the debtor mij^ht have to pay twice 
over (h). 

Who mil/ Pai/.—h is the duty of the debtor to pay, 
but a third party may do so for iiim. In this latter case, 
the debtor should either u;ive his authorisation or ratili- 
cation (i), thouj^h either may be im])lied from the facts. 
Until such alfirmatinn by the debtor, the money may be 
repaid to the payer, and then the orij^inal debtor's 
liability does not cease (k). 

(il) If the debtor after ^^ivini{ a bill commits an act of bankiuiitc y, 
the original debt revives, thouuli the bill has not vet matured ( /.'e 
liaal-., |iS!l7J U Q. B. 80). 

(f.) Marnco v. Richardson, [ lOOSI 2 K. B., nt t). ','.Y.\ : per Farwi-.u.. 

(/) Coira^jcr v. Thoiapson, 5 Moo. P. ('. Hi.j. 

{</) Briilges v. «ern/ (1810), :j Taunt. 130. 

(//) Price V. Pric, (184()), 10 .\I. .S: \V. L'32 ; Davis v. RdUii, |I8'.)8I 
! «^ B. 1. ."11 

(/) Simpmii V. Kij(jiii(jton (iS.Ofj), IC ".v. 845, S47. 
(/.) Walter v. ./awes (1871), L. K. ti E.x. 124. 

Payment in Satisfaction. 


To whom Payment may he Made. — The payment 
should be made to tlxi creditor, and if there are several 
joint credittjrs then to any one of them. If one of 
several joint creditors collusively with the debtor 
t'ovi^ives the debt, the release may be set aside by the 

Payments may be made to the creditor's ajzent. if 
made (i) in and accordinj;; to the usual (lourse of busi- 
ness {I), and (ii) before the principal ^ives notice that 
ho requires payment to be made to himself (m). In the 
hitter case payment can \-a made to the a<,'ent only when 
lie has a lien on the <^ooas — e.g., to a factor, in which 
case payment to the principal is of itself no defence to 
an action by the assent (w). The following are examples 
of decisions on payments : 

To a factor — good (o). 

To a broker — bad (p). 

To a person sitting in an ollice and apparently having 
charge of the business — good (7). 

To an auctioneer — it depends upon the conditions (r). 

To a solicitor producing a deed having the receipt for 
the consideration money in it or indorsed on it, 
and executed or signed by the person entitled to 
give a receipt — 'good (s). 

Itobinnon v. Hiilter 
Fish V. Ktmplon 

(I) SaaiulersoH v. Bell (18;J4), 2 U. & M. 304 ; Calleiall v. Hinilk 
(IS(J7), L. 11. 2('. P. 18(). 

(ot) Oiirdinn- v. IJavi.i (lii2r>), 2 C. & P. 49. 
y (») WUliaiiLn V. Millimjton (1788), 1 H. Bl. 81 
(KSoo), 4 E. & B. 954. 

(o) Drinkwater v. Goodwin (1775), (Jowp. 251 
(1 849), 7 C. R 087. 

(p) Baring v. Corrte (1819), 2 B. & Aid. 137 ; Montagu v. Furwuod, 
[1893] 2 Q. B., at p. 355. 

(q) Barnlt v. Deare (1828). M. & M. 200. 

{r] Sykes v. Giles (1839). 5 M. & W. 645. 

in) CjnveyaiK'ing Act, 1881, s. 50; and see Day v. Wvulirich 
Eqailahle Buillln.j HociHy (1889). 40 Ch. 1>. 491. 

'" 1 

(!4 (Jeneral View of the Law of Contracts. 
To trustees — jiouil, if rereipt in writing is (tbtained (/). 

AppropridtioH of Puf/ments. — If a debtor owes more 
than one debt to u creditor, and makes a payment 
insufficient to satisfy the whole indebtedness, tlie numey 
is appropriated as foHows : 

1. To whichever debt the debtor desires, provided ho 

exercises Ins option at the time of payrnent ; 

2. If lie does not ehnt, the creditor may do so at anv 

time ; 

3. If there be a current a^^count between the parties 

the pre3umi)tion is that payments liave been 
api)i()pri>ited to the items in order of date ; ])ut 
tlie presumption may be rebutted (w). 

Debtor s Appropriation. — " There is an eatablishvd 
maxim of law that, when money is paid, it is to be 
applied arcordin^ to the expressed will of tlie })ayer, not 
of the receivei'. If the party to whom the money is 
offered does not at;ree to apply it accordini^ to .he 
expressed will of the party offering it, he must refuse it, 
and stand upon the rights which the law gives him " (.r). 
The appropriation may be by word or by con<lu(t — c.;/., 
if the debtor owes two debts, one of £30 and another of 
£37 10s., and pays the latter sum, it will be presumed 
that the latter is the debt intended to be paid (y). 

Creditor's Appropriation. — The creditor may appro- 
priate when the d^utor has not done so, but the debtor 

(t) Trustee Act, 1893, s. 20. 

(«) The Mecca, [1897] A. C. 28tj ; CUiytons Case (181(1), 1 Mer. 
uS.'i, t)08. 

(.r) Cami'hkli,, C.J., in <'roft v. Lumley (I8&SJ, 5 K. iV H. tUS. 
(ij) M,ir,iian.s V. lF/u7t (1817), 2 Stark. 101. 



!iiust tirst hiivo had ati nppnituiuly (»1 electing ; so if a 
il«htrn'.s ruont'V cniiui to a creditoi".s hands, the ii;4ht of 
the latter to apply it to a particular debt will arise, only 
after the former has had knowled;^*'. of the circum- 
stances (;). The creditor's appropriation is revocable 
till communicated ; so if he enter a payment t(» a certain 
debt, ho can afterwards alter this, unless he has disclosed 
the account (a). " If the debtor does not appropriate 
it, the creditor has a rij^ht to do so to any debt he 
[.leases, and that not oidy at the instant of payment, 
but up to the very last njoment " (h). He may even 
appropriate when bein<j; examined as a witness in an 
action brought by him against the debtor (c)- There is 
in this respect no difference between a specialty and 
a simple contract debt, and if both exist the creditor 
ii\ay appropriate to either. If there is a real debt, the 
creditor may appropriate the payment to it, though 
the right of action be gone— e.(/., a debt barred by the 
Statute of Limitations ((/). The creditor must, however, 
have some legal or eiiuitable claim, though it may not 
be enforceable by action; he cannot appropriate a 
payment to a demand arising out of a contract for- 
bidden by law (e), nor does his right to appropriate 
remain after a judgment which does not give eflecfc 

Current Accounts.— Wlarti there is an account current 

(;) \\<tlUr V. Lacy (18-40), 1 M. iV G. o4. 

(<i) ib'iH».s(j/i V. 7N(//w»i (IS23), 2 B. iV, C'. >. 

(/>) Blackburn, J., in CUy Viscount Co. v. MtLum (I8<4), L. K. 
',> V. V. ti'.t2, "(.K) ; Tlic. Mecca, :iupru. 

{c) Seymour v. I'ukdl, llOOaJ 1 K. B. 7lo. 

((/) MilLi V. toivkes (183'.t). i> Ki»fJ- ^'^ <'• ^^'^• 

(() Lamprdl v. Guardians oj BilUncay I nion {184',»), 3 Lxcli. -SJ, 
iiOV ; \\ fKjIU \. LauHj \\&.iV,, :i B. .V C. 105. 

(/) Sntilh V. Belly, [VMi\ 2 K. B. 317. 

M.L. " 


(ih.NKiiAi. \ii;w (II I (IK Law u|. CuMKArrs. 

iM'twccii ihv piiitios — t'.//., a liiiukiu'^ juiount tin- ^ifiicrul 
ruld is thill, piivnuMits I'xtiiii^uish tlio carlior itotii-s nl 
debt (//). •• If tluiic is iiothinj^ to show a toiitiaiy in- 
tention, thi; items of credit must be appropriated to the 
items of debit in order of date " (h). Tliis. however, 
is liiit a presumption, and it may be, rebutted bv eviib'.nec 
•showiun a contrary intention. •" A particular mode 
of dealinii. and more especially any stipulation between 
the parties, may entirely vary the case " (/). 

In the of a curieiit account lietween banker and 
cust(Miu'.r the rule in Cl'tijlona Case may <»peiate to the 
disadvanta^e of the banker unless care is taken to prt^vent 
it tnun .so doing. Thus, whert; a mort;,'aye is ;;iven to 
a bank to .secure a runniji^ account and the customer 
subsecpiently creates a .st!cond mort<;a.i:e on the property 
in favour of a third penson, the banker caiuiol after 
notice of such .second mortjiage, mulm jurfhcr advaiu-es 
to the prejudice of the second nu)rtna,uee (k). If the 
banker continues the account, all further advances will 
be unsecured and all payments in will b(' ajipropriated 
to the previous advatues secured by the mort<^ajie, so 
that in the end tiie banker may find that the .-^ecuritv 
has been wliolly or in part satisfied, wliile the debt in 
substance remains unpaid, for there is no -round for 
presumin-,^ any intention on the part of the bank to apply 
I)aynu;nts in to the unsecun-d items in order of date in 
priority to the st^cured items (/). The ,same result mav 

('/) fla!/lo'i\s /'ii.'i, (Lslti), I .Mer, oH',, (iOS ; Jiudnihain v. I'urtluu 
(1811)}, 2 B, & Al(i. 3!(. 

(/() Blackburn, ./., in r,7// J),MoHiit Co. v. MiLnm. {Is74) L U 
!» i'. V. fi<J2, 701. 

U) Huiiukn V. \y t'j'j (\^W.)), L. l{. 1 (l li. 7'.I2; lit Haiku (i6ii-0l, 
l.S Vh. 1). t»)tt). 

!.<•) Hl>l>lun.-:,„: -.. A',,.'/ (|si;|). (( Ji. 1.. Tj. . :,[,]. 
(/) Dull;/ \. Llwrii llunL; li'.MJJ A. I'. 750, 

pKKlnitM WrK nK A <'umi;\i|', 


liii|)|M'it iu tli<t ciusr t)l u t-outiimiii;' i;iiat'Htiti'u wliirh has 


L'll 1) 


if the i>uiikt*r tli 


not wish to (iufon t) iiiunitdiatf. payment id the wt'cmt'd 
lialuiice, \u'. laii avoid tho n|i(>rati«)ii ot the nilu in 
('Idijlon'n Cane 1>\" tiic .sini;th' dcviic^ of lucakiii^ the 
arcouut and «)[)(Miin;^ a new and di.stintt an-ount for 
fi'titili traiuiat-tions (m). 

As against his cechil que Inint, a trustee wlio lias 
mixed trust mon(\v with his own moneys in his hanking 
aerount may not set u[) the mie in Clai/lon fi Cum', and 
it will l)e. i»resumed that in tliawing Irom the hajik he 
drew on his own and not on the trust money (n) ; luit 
it the trustee, exhausts his own money and draws out 
|»ait of tho trust moneys, the ehaige of the ee^ihti que 
hast upon the credit f)alauce is limited to the h»west 
sum to which the trust moneys have at any time heen 
rciluced, althougli afterwards further moneys may be 
l)aid into the account hy the trustee ; unless he has 
expre-ssly appropriated such further motu'As to the 
replacement of the amount improperlv withdrawn (o). 
The ordinary rule must, he ap[)lied as between two 
cestui'^ que trust, both of whose funds have been paid in 
and partly drawn out of his baidc by the t rust(x» (y>). 

Receipts. — A receipt is the best evidence of payment, 
but it is not the only evidence, nor is it. unless under 
seal, conclusive iu favour of the payer— (^^., its effect 
may be rebutted by evidence ; it may be upset by 
proof of error. It has been (questioned (in cases of 

(in) llemarks uf Lord Hllbounk, la it Ulitrnj (l6blj, 'lo Cli. i>. 
ill p. 702. 

(li) lie UailUt\s EMalt (18SU), \.\ Ch. I». (i'Jti. 

{•>) Jniitis RiiMdi {iiiUloii), lA'i. V. W iiidir, [I'jijj I 1. ii. OJ. 

(/j) Ik >>(uiiiiii'j, I ISSttoJ :: I'h. 43a. 

<J.^ UkNKIiM. ViKW mK IMK \,\\\ i>\ inswiMii,. 

IrutWr) wlnMin ..r m.t a i.rript, « an Ih- (IrniatKird hk m{ 
ri;;lit (Y), hut Hi.j «l»Hisioiis iiihln «'iiilier HUtuti's may 
not now, jiH hy Ihn Stiiriip Act, IH'.M, .s,s. |0| -103, 
thr. iliii y ol «(ampm;i i^ imiiiarily tlimwii on thn«i«'i|itor ; 
I Ins n'lu.'cr.s hiru luil»l«j to a pvuiihy il lir n-luNCs to ^iv« 
a nvoipt, or ;;iv»!,s oii.>|.cily slatniMMl, and it woi^rnb 
that iliMiuiiKliu- the |H!rlor»nuntc ol a dtututoiy duty 
ou;^ljt not to invalidate u tender. 

Right to Interest. 

There is no iiupli. ation at foninion Kiw of an agree- 
ment to pay interest. ex( (ipt in the case oi certain 
coMwnercial instnune,nts-<'.y , |,il|,s ,,1 exchan-e (r). 
Tims, for example, interest will not, in the ahsemc. „t 
a^^reement, be allowed on the following,' ; a guarantee (a), 
an account stated lor -oods soM (I). But there ire 
exceptions to the rule, lor in the following cases iutercht 
— i.e., simple interest (compound interest is never 
allowed, unless by express or implied contract (//))- ia 
chargeable : 

(1) Where there is an express or implied agreement ; 

(2) Where the usage of trade allows it ; 

(3) On money duo on awards and payable on a certain 

day and properly demanded (./) ; 
(1) On a bond with a petmlly {y) ; 

(is-n;, 8 .u. iv VV. «'Jb. 

(r> The HilU of Exch uiye Act, l8S:i, s. 57, now rci-ulatos Mils 

(«) llam V. Hickurds (ls30), 7 Hiiig. 2.»4. 

(/) (;W.c V. iMkt of lork (1800). « Esp. 45. Marr, HpimRatly 
lor moiioy leal (Blaiuy v. Ue.ii,lrickd {1111}. i \\ . HI. 7»i:) 

{a) Fi.rijasmm v. t'ljft (lS41), S C. A; R IJI. 

(X) Jo/ui^on V. lJurrmU(\Hl<.>),iC. & 1'. ;{27 ; I'lnhurn v. Tuckuriloii 
(I.Hl 1), A Camjt. 40H. •' 

.i,^*/^/',*" '• ''"</'• ' '*• '^ i'- ^^7; tumuva v. .'imah (ls,llt). 
2B. \. Aid., at ]}. ;j()S. V '-' w. 

Pkrkdhm wcf: of \ Contrxpt. 




Ah UL'oinsf tlic |tiin(i|i:il .l.-lttor. i.n iiionrv paitl 

liv a Hiin'ty ( , ; 
Hpuii moii.'v nhtiiitu'tl l.v fraii.i and n-tainod h\- 

fraud ill) ; 
Hy s. 28 ol tlif Civil I'l.Mt'diirv Act, is:i;j. intorost 
at the ciMT.Mit liiti' may he allowed hv wav of 
• lamaues on all del.ts or siuiis certain pavahle 
at a certain time l»v virtue of a written instrn- 
ment ; u\ if |.aval.l.' (.t lierwis.'. from the date of 
a written ilemand for [nivment ^ivim; notice 
that interest will he claimed fn»m the date of 
deman<l until payment. The '-sum certain 
paval.le " must he one which is due ahsolutely 
and in all events to the creditt.r (6). If interest 
is iiiven under this section, the rato is usually 
."• per cent, per annum ; hut this is not invari- 
On a ju<l'4inent th-ht runs at I per cent. 

until the judi,'ment is satisfied {(J). 
When hv Act „f Parliament it is provided that shall he piyahle. The Hills of K.xchanyo 
Act, 1882. for instance, provides that interest 
from time of maturity, or (m the rase of a l»ill 
payahle on demand) fn.m date of pre.sentment 
for payment, shall he payahle hy the party liahle 
on a dishonouied bill (f). 

(z) Pt^lrii V. Diitiiowhe (1 85 1). 20 L. ,1. Q. B '»4-» 
ill) JohiKon V. H'x, fl!H)4| A. (' 817 

!li!KM':A"r.''42!r'''''''''"'''''' ^'"''""^" ''■''" '■■ •^'"""' F.asUr„ /?„./. Co, 

liuu. I,„. V. S,,„th h.,iMnn Had. < /.•; (|y.f>i i t'\, ...,;. -,. , 

l.iNi.i EV. t...I.. at p. i:»:{. • . '^ -, i ' H. !-,> . „h.i ,ee p,r 

ul) .ludiririents Aot, ISIW. 
(f) Si'itiiin .IT. 

7'> <;i'\i'C\i \'irw Ml- Tiir Lwv or ( 'it\Ti:\rT,';. 

Tli'iii'ili iiM>nt'\ u\viii'.i In n iHMsuii l»o wron-ifiilly 
withliolil. inlt'iost ciiunut W m-ovemi unle.-^s the jjarty 
t.i wliom the inniK'v is due briu'^s his case within ono 
oi tht' fxcejjtioiis iil»o\<' iiiimod. 

Movivi-hnden Act, Uttui.— Since the a^'olition of the 
iismv huvs. inteivst may he legally chari^ed at anv rate 
;i.'^r.M'<l upon l)y thi' parties to a. contract. But under 
tlie Mouev-hMviers Act. llHMt. the transactions of a 
inoiKH-lender nuiy he re-oponed by the court if the 
interest oi charnes are t>xcessive and the transaction 
is harsh aiul un(•onscionabh^ or such tliat a court of 
cpiitv would 'jive relief. In such cases the court may, 
having re<iar<l to the risk and all the circumstances, 
Mtljuilue wfiat sum is fairly due for principal, interest, 
aiul ehariies. ;nid relieve the borrower or his .«urety 
li.HM piiAMient ot the cxress ( / ). The Act only applies 
to a pfisnn whose iuisiness is that of muney-leudiuii. or 
who in au\ \\ii.v holds himself out as cnrryiivi; on that 
l.u.siiu'ss : it <ioes not alTect the t ra.nsact ions of pawn- 
luoUers. baidceis and others, noi' the contract, of a, 
pfison makinu: a loan in the course of and b>r the pur- 
poses of a busiut'ss not. havinif for its ]>rimary objeit 
the hMidinu of money {(/). 

After considerable contlict of judicial opinion, the 
(asc of Samuel v. Ncnlxild (h). in the Jl<.iise of l.oids. 
has iiuiillv sell led ni)oi\ what principles the Act. is to 
|)c. <(iHstiiied. aiul to cases its remedia.1 provisions 
;ipply, ll undoubtedly extends to c;is(\s in which, a 
( uuil ol' e(|uitv would not. formerly ha\e lirauled relief. 

( f ) Sect ion I. 

(I/) ^S<•lli^lli I'. .SfP. i'.if r\:nilli!r. Ijtihjlthl V. />;>•//•/ 

I K i{. 
(/.) |l'.Mu;i A (' -inl 


l^Fnit)[i\r\\('K ()!■ \ CoXTinCT. 


Till" |)oli(v (if fho Ad \va>; to onal>lo tlio rourt to provont 
u|»|)H'ssion. It'aviii'i it in tlio (liscivtion of tlio couit to 
wt'iuli (^acli casti upon its own niftits. and to look behind 
a class of coiitiiuts which peculiarly l»Mul themselves to 
an altusc, of power. Kxct^-^sive interest (withont any 
ot.liei elein<Mit of nnfaiMcsv. ovetiejuhintf or coercion) 
Miav of itself be e\ ideii c \\v\i the ba.j^ain is harsh anil 
unconscionable, and. it ^lablishod, .lie o)ius is thrown 
ui'on the money-lender to prov*', iiny facts which may 
ju.stify his apparently excessive chaiLies. 

A monev-lender must be re<ii.stered in his own or 
usual trade name, and carry on l>usine.s,s in the retiis- 
tered name and at tlu^ rei^istered address (i). The 
" usual trade nanie "' mus*^. not be one a.ssumed for the 
first time for the purpo.-',e of reuistratiim. and partner- 
ships must be reiiistered in the names of the individuals 
wlio constitute them (/•). It is always a (pie.stion of 
fact at wliat place the business is carried on. ami the 
Aft does not mean that evtuy step and every incident 
of everv piece of tlm monev-lendinn" business must be 
Irausacted at the reiiistered office. Tluis, the money 
mav bt! handed over and the security perfected at the 
iiouse of tliei borrower, if the business is leally controlled 
and directed at the registered address (1). \ siiiyle 
monev-Iendiiiii' transaction anuuints to a carryinj^; on 
of the business ; and if that transaction is cariied out 
elsewlieii^ than at the re.>:i.stered address, it will be 
iile'^td and»piently void (w). Siniilarly. contracts 
lt\ II. monev-lender who has iu>t registered his name under 

(/.) W'liiliiiKtH V. .SW/.c, |l".i|U| .\. ('. ")I4. 
(/),i,d V. f.'ii.l.L ll'.Huj A. f. !_•_'. 
(,/») (..Mi././.s \ l'hillii>.. |IMIS| A. ('. IM'.I, 

7-' View or thk Law op ('oNTRAfTS. 

tho Aft. or ('(tntracts made ' ) somo othor nanio tlian that 
\vhic}i has Itocn rouistervd. ar«' iUefjuJ {n). 

Wlien; tht; transaction i.> iUeiial repayment of the loan 
cannot ho enforced, and anv security ifiven for it njust he 
restored, the horrower heiuir a person wliotn <!ie Act 
was designed to protect, and he is therefore entithnl to 
recover. ni)twithstandin<i the illei.'ahty of the trans- 
action (/<). ff the security is vaHd, tlie transaction 
cannot be opened as against a bona fide assignee ft)r 
vahie without notice [o). If the security is invalid, it 
will yet be i^ood in favour of a bona fide assignee for 
value who is not himself a money-lender and who to(»k 
it without notice of any detect due t(» the operati«)n of 
section -1 (»f the M»»ney-lenders .\ct. 1900. In such 
the money-lender is liable to indemnify the borrower to 
the extent to which the latter has been prejudiced bv the 
assii>nment (/>). 

A money-lender nmst mtt be registered tinder any nairie 
including the word '" bank." or iuiplying that he carries 
t>n banking business {q). 

Breach or Contract. 

Toldl Bredch.— Vpon breach o," contract there is 
alwavs a right of action for damages, and thongh no 
actual damage can be proved, nonnnal damages will be 
given. If the contract tis d ichole is broken, the injured 
f)artv has several remedies : (i) he nuiy treat the breach 
as a discharge, refuse to perform his part, and resist 
successfully any action brought upon the contract ; 

{,<) VirlDtiiiii Ihii/UsfonI Si/iidiriili, {.imilKl v. ]t,,lt. ||!IU.">| 2 ( 'li 
t',1'4 : Buiiitiird V. Dott, \\\m\\ I Cli. 740. 
(») Scitiun I (.'i). 
(/») M.mevlendrfT Alt. lyll.s. i 
(.;) /Inii..\. J. 

Hhfach of Contkact. 


(li) ho niav lirini- a claim fur (Ininaucs either bv an 
Mtum of liis own, ur by wav uf t ounteiclaiju in an 
action bioui^li against him by the other partv ; (iii) he 
may, if he has perfori.ietl any |iart of tlie a>;reement, 
briiiL,' an action for an amount efniivah^it to the \v(»rk 
• lone: this is calleci suin;^ on a (/luiii/inii nivniit. and 
the ,laim shouKl be co-extensive with the work ( (/) ; 
(iv) in certain cases he may briiiu an action for specific 

Purlin} Breach. — \i tlie non-performanre uoos onlv 
to a part, of tlie contract, the ri-ihts of the injured Martv 
are much more dilljciilt to determine. If the non- 
performance of a particular portion of a contr;ict l)e so 
far (.f the e.ssejice of the contract as to impiv a virtual 
failure of the consideration, then the injured partv will 
be discharued fn.m further perb)rmance on his |»ait : 
otiierwise he must seek his remedy in daiuayes for the 
particular breach (.v). '• The rule of law . . . is that, 
where there is a <'ontract in which there are two paities. 
each side haviuLi t,, d«, somethin-i. ... If von see that 
the failure to ])urb.rin <me part of it ^oes to the root 
of the contract, !';oes to the foundation of the whole, 
it is a jrood defeiue to .say, " I am not ••oini' to perforru 
my part of it.' . . . hut Mr. Cohen contended that 
whejiev.T there was a breach of a material part of the 
contract, it necessarily went to the root of the matter. 
I cannot agree with that at all " [t). 

[r) F.ini.sirurth v. <;,in<ir,l (IHOI), 1 Camp. ;t8 ; l'l,no-y v (Ulnirn 
( ls:W), S iiing. 14. 

(.v) Set' ii.>te.s to l'vr,la<ji' v. Col,' (liit*9), I Win. .Saund. MH (c.l. 
ISi 1 ). 

U) J,..rd Hla.jkburn in M.r.<fy Ht,^l :,n<ihM Cu. v. .V./u/o;- 1 1«m , 
y Ajij., Cas. 4:{4, 44.'J. " t '"•■"«;. 


74 (;r,\r.i;\r. Vif.w or tfie I.wv of Conth vrx?;. 



Fn>(|)H'iitlv it liappons tlial. llio rt.ntrart is oanilv 
(livisiljlc. into various si i|»iil:it-itnis - fi.^.. tn dflivcr '"^o 
at cfitaiii stated intiMvals. on Marcli 1st, April 1 Mid 
so on. ill wliich cas*!. in tlic ovont of bivach of <>im> oi 
tJKMn. t]i«' u<;n»Mal nihi is that tin' rtMiirdy innst bf by 
action tor dainam's. If. Iiowcv.t. tlic. partio-s «>xpivssly 
airree that breach of a sill^le term shall entitle the other 
partv to treat, the contract as abandoned, the ueneral 
nil." is in,ipplica.lile (//). And if a party shows by his 
acts, oi- othciwisr. ;m intention not any lonuer to be 
bound 1>\- his <-ontract, this ^ivtvs the other a ritiht to 
retuse further periorinaiice. though, so f;i.r. one term only 
hii.s hern bioken. " The real inattei for consideia.t ion is, 
whet her I he ;uts oicoiidnct of the one do or do notamoiint 
to an intiniiition of iui intention t,o abandon and alto- 
•ietln'rto re.fiisi^ peiforniaiict^ (»f the contract" (x). Thus, 
plaintiff a'^reed to Imy of defendants some inm, to be 
dt^livered in two instalments, net cash within a f(»rtnight 
of deliverv ; after delivery, and when the first payment 
was due. plaintiff refused to pay, ur-iinu; a set-otf lor 
late deliverv :—HpI(I. that this did not exhibit an inten- 
tion to break the entire contract, so as to justify the 
defendant's refusal to continue performance ; his remedy 
was in damages for breach of contract (//). The House 
of Lords approved the principle in Mersei/ Steel mid 
Iron Co. V. i\(i>/lor (z). 

If the bioken stipulation is tpiite independent of the 
remainder of the contract, or if the agreement of the 

ill) (Uiltir V. l'uir'll{\M\~i). 2 Sni. L. C. (12th ed.l 1. 

(t) Lord CoLKiiiixiK 111 F,<,tli V. Burr (1874). L. R. 9 C. P. 2U8, 


(y) Fneth v. Burr, fHpra ; .see also \[ ithers v. RfynoUs (1819), 
2 B. A \d. 8.S2 ; Simpson v. Crlppin (187:<), L. H. 8 Q. H. 14 ; and 
,/. H,»ich V. .»/((//.»• (1881), 7 y. B. O. 1>2. 

(;) (1884). '.I App. Cns, 434. 

l')Kr.\f'ii (»r <'()\Ti!\rT. 


'10 pnilv is (iiinlii ill (onHidt'ialiuii nf llio n'j:i'<"finont 
(and ii(»t of till' |i('il'i)iiiiant<') of lli(» citlicr party, tlif 
uuly rt'iiicdy is in tross lution.s for (liiina^t's. Th<> 
modern tcndt'ury is atiiiinst sncli a cfjustruction of the 
contrac't. but even in riMtMit times rases of the kind are 
to he found {((). Thus, if A. agrees to huihl H. a house, 
|)ay merit to he made on .January 1st, ami the payment 
is not made, A. may sue IJ.. l)ut he «anno<- refuse to 

In some cases the contract will iucimh' stihsidiari/ 
promise.^, amonust which may hf. mentioned warranties. 
These are. deah with laier in the treatment of the con- 
tract of sah^ (/>), and also in connection with marine 
insurance {<-). The dilllculty is to determine whether 
a certain stipulation amounts to a condition, or to a 
warranty nuMely. and the question is of importanc*' 
inasmuch as the breach of a condition will lienerallv be 
<i;round for avoidance of the contract, whilst the ordinary 
lemedy for a breach (»f warranty will be an action for 

As regards coniUtions, these may be precedent or 
concurrent, if a condition is concurrent, each party 
should pt^form his airieenient at the same time f.jj.. 
in linnhtrt v. liom-rs {d), A. ai!;reed to buy a mine 
from li., and B. agreed to all coal lioni A. 
A. sued B. for not takinjf coals, but it was held that 
the acts provided for by the contract were to be con- 
current, and that the plaintilt" A. show that he 
had perf(»rmed, or at any rate was ready to perform, 
his part of the agreement {e). A condition precedent 

(<i) See MMork v. Kimjlake (IHlJy), 10 A. & E. 5U. 

(It) Pout, pp. 2li;{ et seq. ; 2(>S <l .■ifq. 

{r.) PoM, pp. WW 412. (-/) (iStiti), L. H. 1 C P. 484. 

(.) And see MoHoii, v. I.amh ( 1 707), 7 T. ){. 125, 

Hi ' 


7C, ilF.NF.KM. VlF.W OF THK LaW OF < '..N TKACTS. 

a,t\.r. fron. a war.antv ; M.o latt.r .s a c-ullatoral under- 

tik.n..- l.ut. tl,..u.l. rulhiTHal a part, ol th»' nmtraot. 

\ .unait.uu i.m.a.nt is wIum.' s...... a. t MiU.t l.o 

,.,f. „,,„,1. nr s.,M,.' .'v.nt liapiM'ti. -■ •'^•""•' <""•' <'''M'-^'^ 
,„.,,„., „„. .,„.. ,,;ut V is H.tiM.Ml tu a.Muan.l p..rlur,na.uo 
f,„„, ,|„. „,i„.,'. TIm' answer to tho (,uest.un - con.l.t.on 
ur wiirantv ' - st^Mi.s tluMef..iv to .l.'pnia upon tl.o 
,i,vu.nstanres an.l .•uustrurtiou of tl.' pa.t.rular 


Anticipator,! «m/rA. - Subjoot to what boon 
stato.l abovo. tbo roiuinciatioii of a coiitia. t bv oiio part v 
.Mititb'S tbo utbor to troat. tho contiaot as itupiopovlv 
vosrMHbHl. atul ho, ,nav suo at oiwo lor dainauos. thoi.-h 
tho liiuo of perforMUUico has not yot anivo.l. but ho in suoh raso troat tho ,ontia..t as at an oncl ( / )• 
K..,. an .-xarnph.. mv llurhxt,r v. Ih' In Tour {,,). whoro 
nlaintirt on April I'ith was o.n-a.^od to a<t as oounor 
TO tho dofenda;>t. tho oinph.yniont t.. bo-ni ni Juno. 
l,i Mav t.ho dofondaut wroto t.. inform phiintit^' that liis 
s...rvii-os wouhl not bo mpiiiod. an.l an action was at 
,„i.,, n.n.r.ioncod. althou-h -luno had not arnvod. It 
was hold that llio action would lio. •• Whoro thoro ,s a 
,.,ntrai-t to do an art on a, futuro dav. thcro is a relation 
,,,nstitutod botwoon tho partio.> in tho n.oantuno bv tho 
rontraot. and thov in.plio.Uy proniiso that in tho n.oan- 
li.ue noithor will <h. anythin«i to tho projuduo ,.l tho 
uthor inoonsistont with that folatiou "• [h). I'robably a 
fontrait containing various stipulations cannot l)0 
put an on.l to. and an action brought upon it lor an 

, f ) .lohn^onr v. Mill,>uJ (\SM), Hi Q. H. D. 4(i(». 

S ulrlXr V. />. /. Tour (IsniJ). 2 K. ^ b.. at !•• J'^l' • /- 1^-'' 
('AMl-Hia.i.. <'..!. S.H. also Fr„.^l v, A'«.<//</ ( IS72), L. K. , Kx. III. 







autir.ipatory l.roach, merely on ac.nunt ul repudiation 
o{ one of the terms (()• . 

K.munciation durin- performance will have a similar 
HlVrt In Cor> v. Amhergnte RaU. Co. {k), the pla.ntitts 
a.ueod to supplv the defendants with :'>0(K. tons of 
vrilwav .liairs at a certain price, the chairs to be de- 
hvered in certain <piantities on certain dates. 
wre partially delivered, when the defendants said they 
would tak, no more. It was held that an action . oulu 
be brought at once, without, showing an actual deliverv. 
mere readiness to deliver being sufficient. Lord Ca.mi- 
BEi I said • •■ When there is an executory contract tor 
tho manufacturing and supply of goods from time to 
time to be paid for after delivery, if the purchaser, 
havin-' accepted and paid for a portion of the goods 
contracted for, give notice to the vendor not to manu- 
facture anv more a„s he has no .,ccasion for them, and 
will n..t accept or pay for them, the vendor having been 
desirous and able to c..mplete the contract, he may, 
without manufacturing and tendering the rest of tlie 
,.,ods. maintain an action against the purchaser for 
breach of contract. "" 

If the one i)artv makes the performaiK e impossible, 
this also -'ives an immediate right to treat the contract 
as at ai^end and sue for damages. In Lovelock v. 
Franklyn (I), the defendant agru' 1 to assign his interest 
in a lease to the plaintiff', but before the date agreed 
upon for performance arrived, he assigned to another. 
It was held that the plaintiff could bring an action 
without waiting the expiration of the time. 

,,, i„i,,^lo,', V. .».«..</ (I88.i). M a. B. J>- ■»•-«. Unless, ptrha,... 
U.VUiated stipuUlion ,oe. tu the cons.deraf.on of the 

'""mi^3i).i7y. B. i::7. (0(i64.,,8y. K;m. 

If A. ...n-rs will, \. to ,|„ ., ,,,j,,. ^^,„.,. ^^,^^ j^^ 

ami I ho entire Nvnrl< is ,iot cuiri,,! „„(. is „ I,,-,,,. I, 
Nvlu.l, oxonoratcs X.. un.l A. <n„M..t su.r.ssfullv »„.- 
"n a 7w;</./»» nwniif as on a imitly ihushvd \v„rk" save 
when, it was so a-nM-d. ,„• save wlieie it ,an l,e shown 
that th(^ non-fnihhnent was ranseil |)v the fault of X. (m) 
.So a Iniihler who abandons an entire contraet to erect 
iK'Uses after partly constrnctinu them ean reeover even tlmnyh the owner takes the benefit of Jiis 
work by .•on.pletinLi the bnildin.irs (u). The performance 
Hi the whole work is in sucli cases a .ondifion precedent 
(<• the right to sne. But under a builders contract <o 
ore<.t or n^pair a house, if the work has been substantiallv 
completed and is not entirely different from that con- 
tracted to be done, then althou;;li part of the work iuis 
been o„utte<l or done badly, th.; builder can lecover the 
tontra.i price subject to a deduction for defective 
work (()). 

IH I. 

Dammjes.~^\{ no sum is the amount of 
damages will be left to the decisi.m of a jury or of a 
judge, and the am(.unt daim.'d will be styled unliqui- 
dated damag(\s. 

If a sum is named in the contract as the amount to 
be paid by the defaulting party upon breach <.f cntract 
this sum may be either liquidated damanes. or it mav 
be a penalty. Li.juidated damages are an assessn.ent 
of the amount whiclu in the oj.inion of the parties, will 

(m) Cntln V. Po,rdl (ISUT), 2 Sri). I. C il-tl, ,.,| i i . , , , 
(ii) Snmplif V. H,dgci, ||S!),S] I (J. \\ {\-,-i s,.,. •.!.,. /.• 
[o) Dakn, ill.) .,. (V, />/. ,, /,,, t,.„,ij , ^ ^ g,.,.^ ^ ,^ 

JiUEAt'll »>!• ( UNlItADT. 


tniinM'iisal(^ liir tilt' Itrciicli, iiiul \\iv. cDiirt will, in tlir 
ovnit m| liK'iicli. iiwiiid this Hiiitiimt of cMinpoiisutioii. 
A ixMuilty is an imposition laid on with ii view to sceuie 
ptMloniiiiiu'c. and the couits will order only so tnurh of 
it to l)t! paid as will conipciisati! for tiio loss actually 
sustauHid l»y the injured party. In dctenniniii'j! wlietlier 
the sum fix<Ml is in the nature of dama;;es, or of a penalty, 
tluj (.(»urt looks not to the name by wliiih the parties 
liave called it. but to the actual natuie of the thiny — 
c.ff., if the parties fix a vtsry lari;e sum. and call it 
damages for non-payment of a small sum, the court will 
regard it as a penalty (p) ; anil the same view will be 
taken by the court if the sum fixed is cxtiava;;ant, 
exorl)itant or unconscionable in re;;ard to any possible 
amount of damages or any kind of damage which mav 
be conceived to have been within the contemplation of 
the parties when they made the contract {q). 

In ((uisidering whether a named sum a^^reed to be 
paid on l)reach of contract is a penalty oi- li(|uit.lutcd 
dama^es, the test " appears to be, whether the hws 
which will accrue to the plaintitf from an infringement 
of contract can, or cannot, be accurately or leasouablv 
calculated in money antecedently to the breach. If it 
can be so calculated, then the fixing of a large sum of 
money will be >;ated svs a penalty. Where tlio loss is 
absolutely uncertain it will be treated as linriilated 
damages ■" (r). Further, a sum payable on one event 
only will in general be regarded as liciuidated damages ; 
but if payable on the breach of one or more stipuhitions 
of ditl'erent degrees of importance, the presumption is 

{{)) iSuo KviitbU V. i'liniit (18:ilt), ti IJiiij,'. HI. 

\q) tlydcddaie, <lr. i'o. v. i>oi> lose V'tfinnvdu, [I'JUjJ A. C. ti. 

!/■) -Mayuc on Daiiiiigfs (Sth cd.), p. 175. 


UKSKFiM, \lKU iH |HK Lwv (H f 'oNTRACI;;. 

that th«' partifs intimdod tho kuiii to l.i' [ifnal (.s). lint 
even iu th.; latter, if the daiiia;;e is the rtame in kin<l 
ff»r every possible brearh. is imapable of beinj,' pieciselv 
estiiuated, is a fair pre-estiniate of the probable (l.irnH;^e 
and not unconscionable, the sum named will not be 
treated as a penalty (/). 

Damages are assessed in accordame with the followin;,' 
rules : 

(1) The injured party shoult' s(» far as money can do 

it, be plated as far as possible in the same 
situatif)u as if the contract had been per- 
formed (//) ; subject to the qualification 

(2) " The damages should be such as ma\ fairlv 

and reasonably ))e considereil either arising 
naturally, i.r., according to the usual course 
of things, from such breach of ccmtract itself, 
or such as may reasonably be supposed to 
have been in the contemplation of both parties 
at the time they nuule the contract, as the 
probable result of the breach of it " {x). 

Any damage which is not within the rule 
in Hadley \. Boxendale {x) is said to be " too 
remote '" ; although it may in U -i arise from 
the breach of contract. An estimate of dama<'e 

(.■<) Liphumtunt (Lord) v. Moiildand, tic Cu. (188()), 11 App Cati 
:i32 ; Law V. Kcdditch LckuI Bwrd, [18y2] 1 Q. B. 127 ; Slnckland v. 
li iUiam.s [18<t9J 1 Q. B. 382; WilUoii v. Love, [l8<JbJ 1 Q. B. (328; 
I'ljc V. Biiti^^h AutotiMbik Syndkalc, [lOOtiJ 1 K. B. 42o. 

(k) Daiilop Pneumatic Tyre Vo. v. Siw Gara'/c, Uc. Co., [1015] A. C. 
t IK 

(a) Rohui.-iOH V. Ilarmun (1870), 1 Ex. 1). 8o.J ; Hcrlhttm v 
Chtcuutuiu Pulp Co., ( I'JI IJ A. V. 301 ; British \\,.,li,„j/ Ekctri'c 
Co. V. iiidtrijrnund EUcInc Biiil.s., [1<J12J A. C. 673. 

U) Hadh'j V. Bujrr,,,!„.lc {1854), 'J Ex. 311 ; Mayuc uii Ddmaneb 
CMh ed.), pp. 12 a oc-/. * 



iiiiiy be l)ust',(i on |»rnliabilitios, but the tdurt 
will not award damages of a probloniatical 
character upon the assumption that numerouK 
events of a contingent nature would have 
happened (y). But although damages which are 
incapable of assessment cannot be recovered, the 
fact that they are ditticult to assess with 
certainty or precision, does not necessarily de- 
prive the plaintiff of his ri^^ht to recover them, 
if they are not otherwise too remote. The court 
or a jury must do its best to estimate the loss. 
A contingency may be taken intr) account, and it 
does not neccssaiily render the damages in- 
capable of assessment, cvefi when the crtntin- 
gency is depemlent on the vcdition of a third 
party or of the defendant liimself. Thus in 
Chnplin v. Hicks (z) the defendant advertised 
that he would employ as actresses at remunera- 
tive salaries twelve ladies to be selected by him 
out of fifty whom the readers of various news- 
papers, in which the candidates" photographs 
were published, ha<l adjudged to be the most 
beautiful. The plaintiff won her section and 
became one of the fifty eligible for selection by 
the defendant ; but the defendant made an 
unreasonable appointment which the plaintiff 
could not keep, and proceeded to select twelve 
out of the foity-nine who were able to keep the 
appointment. The jury assessed the plaintiff s 
damages at £10U for the loss of her chance of 
obtaining a prize and the Court of Appeal refused 
to disturb the verdict {2). 

(!/) aapwell V. lia^s, [lUlOJ 2 K. li. 480. (.;) [i'jl IJ •^ K. B. 7aO. 

SJ JilAKIM. \lK\V III IHK l.\U "| (uM|;\('|s. 

(:\) l{ tlirrn i.< .spnial lu.->s. iiol fiilliiiii witliiii nllin 
Uruncli (if tin' [iri'crdiiiL^ iiilc (liimii'j,«'s on lliis 
liruil ran li*> awiirdrd only if tlit'K' \n an uctiiul 
contiart t«> In; it\s|»Mnsi)il»', tlicrofor (n). 

({) Danta^ios iiuiv Ixi's.scd ftir prnsju'ctivf, as \v<'ll 
as inclined loss (h). 

SjHolii' /'( ifiir)tiiin(r. -T\\\f> is a rt^nt'dy granted 
fftrnn'iK l»y cniiifs of (Minity, Itiif now by all couits. 
when' daina;i«',s of tlKMrisrlvcs will not l»e a siilliiient 
ctiinpcnsation. It is used mostly with r(';^jii(l to con- 
tracts concciriiri;; lan<l, hut in certain cases the couri.s 
will compel [lerfoiinaiu e of other contracts, 'riins. a 
contract for the sale of .1 thini; of laie heauty. 01 of 
one with icLzaid to which there is a fancy value— r.//., 
heirlooms -will he onleied to he s|tecifically per- 
formed ((•). I)iit specific performatice of an ai;reenient 
will iiot he i;ranted (I) if the a;;reement is made with- 
out consideration, (2) if the court cannot supervise, the 
execution, (.'i) if it is ine(iuital)le, (4) if it woidd he 
inieidorceahle against the [»erson askinji for specific 


A contract which is in existence may he t<'rminated 
in one of the foUowin^j wavs : 


(i) By Agreement. 

This may he (I) l>y substitution of a fresh agreement 
for the original, operating as a discharge of the earlier 

(.;) Iliinii \. Muiluii'l lliul. Co. (IST."!). 1^. U- S C I'. I;!l. 
'.h) S'M Hnrd^f \. iW/terytW ( t8«8L l-i App. Cas. 3.51 
((•) JJoidiiKj V. li'tjemann, 2 .). & 11. 544. See also Sale of (iiindh 
Act, lSy3, s. 32, yw*/, p. 272. 

'rKKMIS.MIoN o|. nil. <'oMI!.\t 1 


(MiiliiKl ((/) ; or (2) liv I siiMpKi U'^n'tMiinit In ri'Miinl 
Itrtoro liiriH'li (*') : or (.1) Itv n .is<' itftn l»iratli. 
I iilt'sH .sii|)|M)rtt>(l l»y ViilujiMi^ loiisidciutinn. tli<> rdfjiMi! 
<i| ii raiisi' of lu tioli iiInNuly ikciiumI (except in the ruse of 
Itills u| exrliuti;.'e uiid |tn> notes) tiniNt Ite \*\ 
ileeil (j) : ImM if there he conHidenitioii. u pmol release 
will lit^ ellet tive by wu\ of iicconl iiiul satisfiict ion. 

If there, ui<' several creditors to one (out met. relea.'^e 
hy any one is valid a;:ainst all. hut the court will 
r<'strain any of this power. And. a.s a ^enorui 
rule, a lelease of one of several joint dehtors will 
all : hut here, aj:ain. the courts will so coiLstrue the re- 
lease as hest to carry out tlu^ intention of the parties (//). 

A contract may also he saiil to he di.schar;.;ed l»y 
aureeinent, when it terminates owinj; *^() the occurrence 
of an event. «>n the ha|»peninij of whicli it wa.s prc\ iously 
ai^reed that all rights and liahililies should c<' - r.^/. , 
A. iii^'iees to be bouiwl to M. for 'J.-ttMi. hut if he does a 
(•ertain act. the bond is to he void. Tpon his doin^ 
this act, \. and Ii. are freed one from the other ; the 
foiitracl is at an end. 

t I 

(ii) By Performance. 

See iiiilr. pp. oti et *cry. 

(iii) By Breach. 
See Kiilr. pp. 7li (■/ sc(]. 

(iv) By Lapse of Time. of time does not <;eueralK put an end to the 
contract, l)ut inordinate delay on both sides inav justifx' 

i(/) Aiiti , J). o7. 

(/) LiKt<jr V. Dkns (1820), :» K. A: AM. till. (il4. As U> l)ill.s. bci: 
,jOit, [>p. :U;!, ;!il. (;/) Bai-. Abr. Kek-usi; (A). 





tlu> iiifneiu'o tliat, tlie < nntnut has hvvn ahaiuloiicd (//). 
Lapse ..f ti,n.' nu.v Uu^ riulil to an actmn to 
,>nforcotlu-(ontnut,fo!l>vth.>>ilationA<t. lO'ilKS.IJ, 
it. was f^nac'ted that all acti.^iis on parol ( oiitiacts (with 
an exception simv repealed (/)). shall he •■(o.nmenced 
and sued within six years next after the cause of sueh 
a«tioii or suit, and not after. 

Bv the Civil Procedure .\ct. Is;',.;. s. :'.. the action 
„,,.,„ a contract under seal must he hrou-ht within 
twentv years from th(^ cause of action ansinu- 

Bv the Real Property liimitation Act. 1874. s. 8, 
it is provide*! that no action, suit, or other prococdinu 
shall h.- hrou-ht to recover any sum of nmnev securcl 
hv anv le-acv. jud-ment. mort<;ajie. or lien, or other- 
wise char-ed upon or payahle ..ut of any land, hut 
within tweh e vears next after a present ri-iht to receive 
the same sliall have a.< rued to per.son capable of 
Uiviim a discharge ov release for the same. It should 
he noted that this A.t applies to the pers..nal covenant 

in a mort-a-e d 1 as well as tu the remcdv a-ainst the 

land, so that in such cases the reniedv on the specialtv 
is barrel after th<' lapse ..f twelve vears (k). 

Since under these statutes the riuht is not destroyed, 
tlu.u-h the remedy hv action is taken away. s(. that no 
action can he hniu-ht. tlu- contract still exi.sts. and a 
li,.u in respect of it will not he destroyed (/). If. more- 
over, the contrat t is p.-rfnim-d. tli- perf.uniaiice will be 

,) M.Tcant.lo l.nv A.nrnd.n.nt .\< t. \HM. s, '... J lus atfoct.s th- 
Loannj; of tl.r StatuU' ,4 Limitation ~ cm .n-.rr amounts. 

a-) S„,l.,„ V. S.lln,. (ISS:{). -l-l < I'. !>• -'Il: Imrn.Hh ^. / ^- '. 
,l,„l .-,7'J. Tl..-rr 1.. hnw.x.r. mm Statiif of l^.n.Hation lu WMV 't.M 1.- onf,.r.r,i h- h,u;\o.urv ur .alf {Lnn,l,m and 
^M,.ll,n'<.l Ii<n,kv Mlh■l„ll.\\H•^<^\■2^U Mil). 
il) Ihgqxns V. ^coH (lhl'.«). - I'- --^ A<l. tl.i. 

Statittk^ of Limitations. ^ ' 

,,„n.l. nn.l rivl.t. aoqnire.l thereby will ren.ain valid, and 
ranuot 1m' K'sciiuled. . 

Th. ti.ue n.nds fruiu the dav when the plamt.lT ran 
Wnvr l.,s a.tiun ..7.. wl^'n the .nonev bec.nes due 
,nd wh.n the debt r.n be movered by actum (,n) ; 
,,..,..,, when> the d^f.-ndant was a fnm.n and^as- 
sador and iniviWed Iron. bein. sued, the statute d.d 

not be,,in to run a;,ainst the plaintitT untd the delendant 

ceaseil to be lunbassador (»')• , -r .1 

,ni • ( <»,.» «tifiite niav be s»isi)ende(l it the 

The r\innnvj; ol the star.uTt. uia\ , . .„ 1 

parties are nt.der eertain disabilities. > pla.nt.ft who. 
when the cause of action arises, is nnder twenty-one 
vears of aue. or is a frwe covert (.). or is non annpos 
,.../;.. has six (or twenty) years after these J '^ 
,,.ve ceased wherein to brin;. action {),). But where 
,,,, ,i„, ,,,s once be,un to run. no subsequent d.s- 
abilitv wiP suspend the operati<.n ol the Statute o 
i;„„itations (,). U. however, there are several jomt 
,,,ailors.thc disability of sonu^ will be no answer b> 
1,b« others for neglect in brin^ini^ the a.t.on w.tlnn the 

"Trthe defenM is In-yond the seas when the cause 
of action arises (Irehuul not to be so -.ns.den.l ho 
statute will not run a,.ainst the planit.l untd the 
.bdendanfs return (/). Hut if anv defendants are .n 

Masnrit-i lifil v. (ludbim, supra. 

•■^n (;r:\KR\f. ViF.w or tuk I.\w of (Oxtrxots. 

tlio,fi„n. Mioso ho pnM,..Mlo,l onniiiKt witli- 
oiifc Willi in.j ti„. ,,.(„,„ ,,|- f|„. ..tli.'is (,v). 

It til.' pliiinfitl' was ijiii,„a,it „? his rjulits. and fl„> 
<aiiso. r.l ,su.-h iMUcianio was tlw. frau,] „f tlic dclondant 
<>.ud a liaud whi.l, ,„uld not. wit!, tl.r rxeroise „t 
mison.hl,, dili,..,i.... I.av. l,..,. .lis.ov^Mod boforo. then 
tlie Mnic aHowrd l.v th. Stut.ik.s of Limitations com- 
•nences to n,n hum tho discoverv of tlie fraud (/) It 
IS immaterial whether or n..t tiie wron-d.^er },as taken 
aetive measures to conceal his fraud, so Ion- as the partv 
inj">ed has no. heen vuiH V of hnhes in failinu to discoveV 
(h's I rami at i.n earlii-r period. After (h'scverv of the 
lra.iid the statute comnienc<is to run (u). 

On the other hand, wh.^e monev J,as heen pni<! under 
a mistake of fact, the statute he.uins to run from the date 
of payment, and n..t from the date wlien the pavment 
was actually discovered, nor fro.n the date when it 
miuht have been discovered by the exercise of reasonabh" 
dniifence {j). 

R^'riral of tJiP Eemih,.^ Although the ri-ht of action 
IS ahea,dy barr.'il by lapse of time, it niav be revived bv 
ackm.wledon.ent of the debt, or bv (what is miuh the 
same) part payment (y). 

Acknowledgment at (uie time could be mack- verballv 
N,nv. by Lord Tenterden's Act. it is enacted that " no 
aeknowled,mnent ..r bv words only shall bo 
<l«en,ed suHicieut evidence of a new or continnin.^ ,0,,- 
tract. whereby to take any case out, of the operation of 

\l} ;y.f',''a"tile l>a\v .A.iu'iKJimnt A.t, 1850 s 11 
(t) OMts V. Ouihi(\>^H-l).\)q.\i 1) .i<» 

[.e) Bahry. Cuiuaye .t- Co., [IQlu) I K. B. 5«1. 

(ij) hee Chasptnore v. Tunifr (187r,), 1,. R. k) y |j r,^^, 



[thfi Statnto of Limitations (z)l or t(» iloprivo anv 
party of the IxMiefit tlioroof. niil«>ss such acknowhid La- 
ment or promise sliall be made or contained bv or in 
some writinj^ to l)e si<:;ned l)y the party oharjieable 
thereby '" (a) ; or his ajient duly autliorised thereto (/»). 

The Mercantihi Law Amendment Act, 1850, further 
enacts tliat a j)ayinent of principal or interest by one 
co-contractor sliall })e j^'ood to renew the remedy as 
ajfainst himself, but a«,'ainst hirnseli alone (c) ; bnt the 
benefit of this provision is conlined to certain specified 
Acts, such as the Limitiition Act. U)2."5, s. .'5 {d) ; and 
the Civil Procedure Act. JS:r>, s. ;j (c). 

The Civil Procedure Act, \KV,\. s. ">. contains provisions 
as to written acl\"nowledjiment»s of dt^hts due under deeds, 
but barred by the earlier sections of the same statute. 
Lender this section an acknowledj^ment in writinj^ by one 
of several joint debtors revives the remedy aii;ainst 
them all (/). 

An important question in [)ractice is — What is a 
sufficient acknowledgment ? 

if there be an absolute unconditional ackn<»wledu- 
ment of the debt and nothing more, the law implies a 
promise to pay ; but if there be an acknowledgment of 
the debt coupled with a promise to pay, the question 
arises whether the promise is conditional or uncondi- 
tional (g). li the promise is comliticmal. it must be 

(s) Limitation Act, lt)2.{. 

(a) Statute of Frauds Amendment Act, 1S28. 

(6) Mercantile Law Amendment Act, I85(i, s. i:5. 

(c) Ibid., 8. 14. 

(d) Ante, pp. 83, 84. 

(e) Ante, p. 84. 

{/) Read v. Price, \ 19091 ^ K- B- 724. 

(g) Tanner v. Smart, ti B. *; C. ti()3 ; Smilli v, Thome (1852). 
18 Q. B. 134 ; Vhaseinore v. Turner (\W,5), L. R 10 Q. B., at pp. .^((O, 

88 CKNF.H.Ar, ViKvv or thk Law (»f Contkacts. 

shuwii that tlic (i.mlitiuii has Ihh'ii lultilh'd (//). S.». it 
thf at knu\vl<;(l«;iiit,'nt l»»' ai-niiiijiuiiicd Ity a ict'iisal U> 
l»av (/). or a stat<Mii«*iit that the (h'ht caiiiiot he sued 
oil (/). the statiitv will still operate to hat the leriiedy ; 
hut. an uiu'onditional a«kiio\vledi;uient. couiiled with an 
expression ol hope that the (h-lttor will he able to pay. 
is suliirieiit (/). The ackiiowledmuent also must he 
made hetore action hroiii-ht (in), and il lost, its contents 
ma\ he pioved hy oral evidence («.). 

A lurther way of revivin',' the r«'medy is hv [>art 
payment (»f the deht due on tiie contract; hut here 
also the act must ht^ clearly rej'eralde. to the contract, 
and he done in such u way as to raise a promise to pay 
tlie residue. Tims, when the dehtor in payinu part, 
showed that he considered himself to he paving all. 
tiiere hein- nothin-i to show that he intended to pav 
the rest, it was held that he was entitled to rtdv upon 
the statute („). When part pavnient is made hy hdl 
or clMMjue. the statut*; runs from the date when the 
instrument is hanth-d to the creditoi', and not frtim the 
date of its actual payment (/>). Acknowledi..ment or 
payment to a |>erson otln'r than tlie creditor or his a'-eiit 
will not sullice to ^et lid of tjie .statute (7). 

(v) Impossibility. 
If the ctjiitract he to th) an ohviouslv impo.ssihle act 
— »'.(/., to toiuh the sky -it is clearly void ah iiutm ; 

(/■) A'. /.'«•. , .s7. ,(,/»</■ Co. (liSTl). Ch. S2». fxr AfKi.i.isii, L.I. 

Il) Lint.;/ V. J!,jii-<>r (ls:{(i), 2 .Scott. :{!»!», 4U;{. 

(<) lioil'liofl V. /.nillllS (ISlti). 4 M. & .S. 4.">7. 

(/) ('(jopir V. Knhhill, |l!H>!l| 1 K. B. 405. 

{in) liaUimtn v. I'linln- ({Mi), ;{ Q. 15. .'"»74. 

(/() Unid V. I',ti>. [li(0!») 2 K. H. 724. 

Ui) /■'osY.r V. Yakc/x/- (Isrii). •;. K.\. «:w, sr>;! ; 2tM. .1 Kx ,'{s."., ;!'i:,' 

{p) Marrnu v. Jiichunlson, | l<»OS| 2 K. 11. .584. 

((/) SlaiufuiU, tie. tiitiiktnij ('u. v. SmitJi. | I«".t2| I g H Hiit 



and so it" tli(^ subjfft-niattor lias (casod fti pxist at tho 
tiinn of contract (/). 

It the impossibility aris«'s snb^^fijnontly to tlie inakinti 
ot the contract, it will, in the absence of agreement to 
tiie contrary, be no excuse if in its nature the perform- 
ance miuht have been pcwsible (,s). In Kearox v. 
Pearson (/), a man aiireed to deliver a caru't on board 
in the usual time : but owinn to delavs caused bv ice, 
the cairvinii <»ut of this was rendered imjjos- 
sible. It wa.s held that this did not put an end to the 
contract (»r the condition. So. in Jones v. .S7. Johns 
('ollc(/i' (n). a contractor aiiieed tc and to do 
alterations in a certain time. The alterations demanded 
were such as to make ^t impo.ssible to finish in the 
specitied time ; but this impossibility was not admitted 
as an excuse, the couit saying that he miyht have 
made allowance for s\uh an event in his contract. The 
f(»llowinn iii«^ exce[)tions to the above rule : 

(i) Where the impos.sibility is caused by law — r.q.. 
if after the (contract is made an Act of Parliament is 
pa.ssed renderiuij, the performance illeual (r). 

A temporary prohibition rendering further perform- 
ance ille<:al for a sid)stantial and indefinite time mav 
terminate the contract. Thus, in Metropolitan Moler 
Board V. Dick Kerr (fc Co. (.c). the "Ministry of Munitions 
in the exercis«^ of .statutory powers coid'erred bv the 
Defence of the Realm .\cts required contractors to cease 
work uudei' a contract for the construction of a reservoir 
and to place their plant at the disposal of the Ministrv 

(/■) Couturier v. Hastie (185(1), 3 H. L. Cas. ti7;j. 

(s) Taylor v. Caldwell (\m2), W B, Jo .S,, at p. 8:«. 

(/) (18(51). 7 H & N. 380. 

(/<) (1871). r-. R. t)Q. B. II.'}. 

('■) Hailn V. De Cre.s;)iV/H(/ (I8(i!t). L. K. 4 (I B I8U. 

(r) (litis). I A. C. Il!». 

1>0 (I'FXF.ini, ViFw (ir TiiF Lwv or ('o\TR\rTs. 

(il Mmiitioiis. Hv its ftMins tin' «(.iiti:ut. cnultli'il tlio 
«'n'_'ino<'r to uiant an cxItMisiuii <.f tiiiit> for coriiplptioii. 
whftiv the contriutors had ho»^ii uiiduly d.-lavod ..r 
inipetlt'd : hut tho Ifouso of Lords h«dd (1) that this 
provision did not afiply ; and (2) that the contract had 
ceased to be operative becanse the character and duration 
of the interruption wcnihl make it when resumed a 
really different c. itract l)a.sed on chant-ed conditions (//). 
Jf a temporary prohibiti(»ii oidy affects part of a con- 
tract and the contract remains huvful to a substantial 
extent, and is of such a nature that the consideration 
can)u»t be apportioned, the parties will not be excused 
from further performance (:). 

A person who has in part performed an entire contract 
the further performance of which has become illegal 
cainiol. in the absence of some new aiirecment, sue 
upon a, (jiuinlinn ini'rin't (a). It must not be assumed 
that such a result would follow in the cas(> of a sale of 
unascertained ;;;oods. 

So also im|)ossibility arising!; from a lawful act of 
His Ifajesty's (Jovernment will excuse performance. 
e.f/.. if th(^ (iovernment has re(pii.siti(»ned specilic L'oods 
in the hands (tf the seller before the propertv in them 
hi's pas.sed t<» the buyer, the seller will be excused from 
carryini; out his contract (/>). 

(ii) When the perfoiniance depends upon the con- 
tinued exi.^tejice of a i^iven |)erson or thiuL!. the exist- 
♦Mice of which the patties must from the beiiimiim; 

(V) IlitlHj I A. ('. M'.i. 

(:) l.tisUni (la.t Co. V. Lilsliin ciimSizunll t'rliitn Comnil lI'Mdl 
2 K. |{. 42S, ('. A. 

(n) St.. F.iiwli Sliiij^iiiiij i\,. V. I'lioMiJiiil, .Mitiiiii] C, , |l!t|iil 2 
K. H. 111*4. Sff /;.«/. |.. A v.*. 

{!•) Hi Sliiiiloii ,(/(i/,,s,,„ ,('■,. v llmiis,,,, /,V,,,v a I',, i 4,l,iti,ition 
1 I'll >! :! K i: t.7i; 



liavo known t<» bo nocossaiv to tho t'liUilniont of the 
contract, a condition i,H i!ni)lio(l. that inipossibilitv arisinu 
from the perishing of the person or thinj^ without default 
of the party liahh^ t(» piMfonn tho contract, sliall excuse 
the performance (c), whcttier the penson or thini,' actually 
perishes or .eases to exist in a condition fit for the purpose 
of tlie contract (rf)-f .</.. a lady agreed to play at a 
concert, but was prevented by dangerous illness, and it 
was (UuMdfHl, on the above principle, that no action 
would lie against her for breach of ccmtract (e). 

In Taylor v. Cnldwell (e), which is the leading case 
on the subject, an agreement to let a nuisic-hall for 
fo\ir days was held to be terminated when the hall was 
burned down. Many cases arising out of the post- 
ponement of t)!<^ c(»ronation of his late Majesty King 
Kdward the Seventh have further defined and illustrated 
tlie doctiiiU! of Tai/Inr v. (Jaldn-ell. All these cases 
show that a contract may be based on the assumption 
that a certain event will ba))pen. aiul if the event does 
not Jiappen, tlie c(mtract will come to an end. .although 
the direct sid)ject-matter of \t - e.g., a ship or a room — 
may c<mtinue in exi.stence. But the doctrine has no 
ap|)Iication unless the haj)pening of the event is a.ssumed 
bv b(»tli parties to be the .sole basis of the contract. So, 
a person who hired a .steamshijt for the purpctse of 
seeing an inten<led royal naval review, was held not 
entitled to refuse payment because it had become 
impossible to use the ves.sel for the particular purpose 
contemplated by him(/). Nciither does the doctrine 

(.) {I8(>2), :$ li. & .S. 82(1. 

(,/) .Xickiill V. ,i.tklon,\imi\ 2 K. 15. 12(i; (i CDin. ('as 150. 
(«) HiiliitlKun V. JJarison (IS7!). ''• t'- '' t*'". i!ti!». 
(/) Henif liaii SimmhimI (i>. v. Ilitllon, \i'.)m\ 1 K. H r,s:{ ; </. 
Knll V. Jhiirit, ilnii. 740. 

'.'-' <;i.M.ii.\i. ViKw <.r THi^ Law ok Cuntkaits. 

applv when th.' purtii's liavc fli.MiisHws prnvklod fur 
tlh' .■ontin^,.„ry ..1 }).'rf„iniaii<r iMromin- ifii|M,ssiblo ((j). 
In ciiscs to th«' (i.MfriiM' uppli.'s. fl,,' liujits (,f th«- 
parties must I..' ascortain.'d at tli.- muinont when 
foniiuncf or liiitli.-r ptMlurnian«e l>ec.,in»'s impossible; 
eaeli party is .'xcused fi.,m an\- act uf lurtlier perf(.iii,- 
ance. but the eontract is n,.t v.,i.l „h initio, and nu.ney 
paid under it cannut be recovered back (//). As 
impossibility only i.-bMses the parties further 
|»'''bHHi;ince. it b.llows that il. by tlie t.-rms of the 
•nrit.a.t. any liol.t has accrued 1 the time when 
performance beam., impossible, that li.jht can b.. 
eiibirced (/). 

/'Ifft'rf ,>t Wui- „„ (%„Ur>uls.--\i is convenient to deal 
sepiuatelv with this topic, although it really involves the 
ap|)lication of the principles discusse.l above to the 
spe(ial conditions create.l by the outbreak of war. 
War will render the further perb.rmance of contracts 
which involve tradin- or commercial inter<ourse with 
the enemy iiidawful. and impossible ; alth.uiuh 
neither party to the contract is himself ;in enemy, in 
such .'ase an executorv contract is pnt an end to and 
not merely suspended, both parties bciuii absolved fn.m 
further perb.rmance (/•). Hut the principle ( not 
justily the contiscation oi an enemy's propertv. thonuh 
Ins rii;ht to the return of it is suspended durinti war (/). 

W heie a contract has been entered into before the 

Ui) Blakd.,, V. Mullr. [\m\\ 2 K. H. Too. "M -■^. " . /, 

(j) r handler v. Uelj.^lir, (1904) 1 K. B 4<);{ 

ik) K.po^ilo V liou-'lrn (1857,. 7 K. >V H. 7.;:{. A suspensory Hause 
111 the (■untnict has no operatimi uri-l is iH.ntr.irv to p!it)lie" unlitv 
hrhl littltHT d- Co. V. Hto Tiiilo <\,.. (lltiN] A C -'(iO 

Ind.^sin,. ||>)13| A. v.. at ,,, 245. ^,, L,,,,! F,m,^; | , , • ' 



niifltrrak m| \v,ir with ,i prrson who iMTotnc iiii ali«'ii 
•■ix'iny, lijs ..|»li;;rttinii,s an; Tint, r\tin^iii,;linl il fmflirr 

ptTlMiniaiic*; «if thti contract dttos not iuvolvo. Mm; (l<»ii(<; 
of any ilNi^al act, c.//., an «!nctny husw may be sued for 
rent accrued durini; war (///). 

The question wlu^ther a person is an "■ enemy " is not 
to be (b'termined by his nationality, but by the place 
in which he resides or carries «m business (n). A<(ord- 
•"n'y, if the sul)ject of an enemy power is resitU'ut aiul 
tradin,^ in Enjiland with the actual or implied licence of 
the Crown, he may make c<»ntracts durin;; war and 
ejilorce thetn by action, even thouj.'h at the time he niav 
be intenu'd as a civilian [trisoner of war (/»). 

I'artics may be discharued frctm further performance 
of mercantile contracts by a vital <han^e of circum- 
stanc(^s wliicii bring ab(uit the complete frustration of 
the commercial adventure. This is frequently <ause.d 
by the direct or indirect consequences of war (y>), and 
tiie doctrine appears to rest on an implied coiulition that 
the contract shall cease to be binding under circuni- 
stances which destroy its object and which were nc»t 
present to the minds of the parties when they made the 
contract, for it has no application to contingencies which 
are expressly pn.vided for (y). Mere delay, difficulty 

(/") /ia/«(.y V. LuwciiJ, 1,1, [IKIOJ 2 K. B. TUT ; ,-cc also Sdxjinnn v 
LiKjh Insurance Co., [1917] I Ch. ulft, pof:l, p. :{(((i. 

(«) I'orlif V. Friudnibtrg, [lyi5J I K. B. «57. 

(") SrhtJJniiitti V. Ooldhiry, fl'.HtiJ 2 K. J{. 284, ('. \. 

(/<) The rights and oljjigations of parties to cdntrait.s iiiav he 
aliertfd hy eiuergeiK'y Icgiislatioii of a transitory ifiaraitcr, ha\ in-' 
for lis ohjcrt the tleft-ntc or safi-ty of the realm or the protection o'f 
the country's lilizen.s from serious lianlships. No attempt is made in 
tins work to deal witli sueh temporary iuterfereiiee with lontiaetual 
rights aii<i obligations. 

(7) Tamjilui .Sfaiiii.,lnj, C<>. \. Amjlu AJ>j-i<iiii. tic. Co., fl'.th.J -J 
A. C. 3'J7 ; Uanf: Liin, Ltd. v. Arthur Cnptl d- Co., [I'JI!*) A. t. 

I'l (JknkUAI, \ii;\\ o| IUK li.WV ni (o\ii;\r|s. 

• •r loss ul |ir()tit. will iiol <t| tiifiii.srlvt'.s icjirvc a |nirl\ 
li 1)111 jiis cniitiact. I*ciliii)i.s tilt' Ih'sI It'.st to H|i|»ly is 
to iisk wlirtlu'i ■■ rrusonaldt! iiicu could liavt^ roiitnii- 
[•liitcd tlir ( ircimLsfaiiccs as thov exist and yet liavt- 
niloi«'«l into tlic l)arL;aiii cxpn'sscd m the. dociiinriit " (r). 

(vi) Miscellaneous. 

A font tact may be put an cud to- (i) l»y inerj;ci, liy 
tJMi substitution of a lii^ln-r mad«' of contnut- r.//., a 
jiidi^nit'nt tor a simple contiact <U'l>t ; (ii) by bankiuptty 
(unless tli(! contiart is nni-. wliirli the trustee in baidv- 
iujtte\ can and iloes adopt), so far as the. co iiact uives 
rise to a debt provalde in banlsiuptcy : (iii) it the 
contract be in writini:. I>y an unauthorised alteration in 
a material [»art made by a [)arty seekinj:; to enforce the 


A representation is a statement made by ojie party to 
another, before or at the tinit( of the contract, ttf some 
matter or circumstance relatin-^ to it. 

An untrue rejuesentation ?nay fall into one <if seven 
cla.sses. It may be - 

(a) a mere statement of opinion honestly ;;iven ; or 

it may be a mere flourish in the nature of a 
pittl : if this lie proved, the deceived party in 
such cas<'. has no ii;^ht of actit»n in relation to 
it ; or 

(b) it may amount to a wairantv - ('.c. to an a;:iee- 

meiit not bein;; an essential term of the con- 
tract, l)Ut connected with il collaterally ; the 

(;) ^r(./^.>/( .\,ir,,j„livi< C'K \', n . .1. .Suutu d- Co., [I'.HTJ I K. I'.. 

at p. Jl'J, jILI L.WNUli.NCl;;, J. 

I"'m.M; |{KI'lll<;.sKM.\llnN> 


liilsity iiuiv riilitlc llictletiuvnl juiily l<nluiiii..;<',s, 
ImiI not til iT.scirul (n) ; (»r 
(i) il iiiiiy \n' mi t'ssiMitial t«Mni of tlu^ itditiact iUvU, 

ill whicli 

null tase its falsity will entitle tho tltTi'ivi-d 
[•aity to siu! for daiiiafics. oi rescind the contract 
at his option (/,) ; or 

(<l) it may, thoujzh iniKHcntly made, he a statement 
which tho maker may not deny, for '" where 
one hy his words, or conduct, wilfully causes 
another to helievc the existence of a ctMtain 
state of thin«;s, and induces him t<t act on 
that helief, so as to alter his own previcuis 
position, the former is concluded from averriu;: 
a.^ainst the latter a different state of things ais 
existiiii;; at the .same time " ((/) ; or 

(e) it may he a statement innocentiv made not falliu" 

in any of tho ahove jate^ories. hut which is 
material, and which induced a party to enter 
into the contract ; it may tlien be clas.sed us 
an " iniKKent misrepre.sentation "" ; or 

(f) it may he a fraudulent misrepre.sentation. 

It is propo.sed to lefer in more detail to misrepre- 
sentations classed under (e) and (f). 

(i) Fraudulent Misrepresentation. 

No precise definition is yiven in tho En;:lish law 
hooks ; it has heen .said to include every kind of artifice 
hy which one penson deceives another. The elements of 
which it must neces.sarily consist are the followinj^ (j) : 

(>) But l.rcacli (.{ w,iiiaiii\ in < .niiRMtioii with a polity of uuiniii. 
iiisuiamc i'iititli\s llu- iiijiiifd j>.irl\ to icstiiul 

('! Hut MC HII .■MCplinU (:> flli-," /;.,,-,', jl. tt'O. 

{It) l.oitl i)i:.\MAN, ill i>i,u,d V. Si(n.y (Ik:;7j, t, a. \ Iv, at i. 471 
(j) Ld'jiiiijlou \. i'lUiuiana. (Ibbo), 2'J Lh. i). Vo\), 4bl, 4s:i. 

'.Ml (iKSKI;M. \lKU "I I UK l,AU n\ ( iiMKM To 

I. ,( Fnlsi lii jin ."' ntnlion <>} n Mnhrinl hud \ 
iiHTi! •■xptt'.stiioii of opinioti tln'r<'|nn' will Im^ no firtiiil, 
imr ii.siiiillv will a (Icrliiratinii i>f inti'Mtinii ; fliiis, if a 
\tM<lt>r .siiNS, ■' I think tliul linrsc wmlli II0. ' tlioui;li 
tlif Ntali'int'iit. is kiKiwini^ly falsi', im art inn will lit-. If, 
linwcvcr. In- sii}s, ' I '^n\-r. IfU for it,"" this, if iintiii«\ 
would Ik- such a representation as to lie thr foundation 
of a fraud. \ statrmcnt of intrntioii is usually not. a 
stHt»'nuMit of fiut(//). I»ut it may I..! (:) ; '• \hv. stat*- of 
a mans mind is as iinuli a fart .is tli<' static of his 
di^ioslion," said BowKN, L..I. (.:). It has hn-n tpirs- 
tiom-d wlu'thtT nuMo non-di.sclosurt' »an amount to 
fraud. ■■ M»'n' omi.ssifUi, rvcii thou;::li su.I. as would 
^ivc r«'a.son for setting asidt- a contract, is not, in my 
opinion, if it docs not makti th«*. sul)sta,iitiv»i statcnu'nts 
fals(\ a sufficient ;^round for maintainin;^ an action for 
dc( eit. " (u). and " there nuist . in my opinion, be .some 
active mi.sstatenient of fact. or. at all events, such a 
partial and frajinientary statement of fact, as that, the 
withholdinu of that, which is imf stated makes that 
which is .stated al>.solutely false "" (6). The rule then 
seems to he, that if tlu- framneiitary stati'ineiit madi; is 
rendered untrue hy that which is not stati-d, the reprc- 
scntatitui is fraudulent ; otherwise, it is not. 

•J. .1 livpnxentdliou Kimirn In he FuIkc, or inodt 
utiliniU BdkJ in its Truth, <>r lieckUs.sly, wilknul Curin;/ 
irhilhvr it be True or F(tlt!C.-\t one time, .some judges 
considered that false statements car»'le.ssly made without 

(y) Mnhli.^Kii \ Aldir.-'on (l8!s:i). ^ -M'l'- ''*'*■ ■^''"• 
(.) E>l<iin'jli"t \ t ilziiiiiurtrr (IS85), 2!t ('It. 1)., at [>. 4H;i. 
i.i) Crrn.:.. 1..I., m ArUrrjIit v. X, u'rM {\^>-]). (7 ( 'h. It. :tJO. 
(/>) l.or.l lAiRN.-^, ill /''(./t V. ditrnii) (IS?:!), I>. 1'.. '* H. !<• :t77. W' ; 
ami inr JtiSKi., Mil., iii .S»/m7/( \. Cli'idwuk (I8S2), M Cli. J). Ji>. 


i('!i-.<>i ihle '^rtiinul nf li«*li»l iti (lifit tiiiili. i\[):n\ liom 
actual ilislii>ii»'st\'. ctiiistitiitt'd a .|>»Tips ol ■• li's/ul 
traiul." This dm tiin«' iiin-it lit- tieutt-ii as now t'.\|il(nlt'il 
liv the iiii|»t»itaiit I ,us«' ut Ihrrif v IWk (r) There a 

DiapaiiN' issued a itiuspectii.H. stutiiiu fhut the (■oiupaiiv 
had a ?i'.dit {o use steam power fur its Iraiiiwav lats ; 
as a tact, the consent ..| the Hoard of Tiiide was required 
lieiuie steatM <oidd Ite u>ed. aini when, afterwards, cun- 

eiit was applied foi, it was refused. The diie(tors 
ttelieved the truth of their statements, iind pleiidi-l 
rhat thev had reasonahle uruund for l»elie\ ini; them to 
lie true. Iji the [fouse of f.ords it was deliuitelv settled 
that, in order to ninintaiii an action for deceit, a faL^e 
stateineni. must he (I) f;ilse to the knowlediie nf tlie 
person inakiuL; it : or (J) untrue in fjiit and not believed 
to lie line liy the person m;d<ini:' it : or ('.)) untrue in 
fa<'t iiud made reckh'ssly— c.*/., without any kiiowledLie 
on the suhji'ct. and without cariiin whether it is true oi 
talse. Hut a false statement honestly iruide without 
;iny reasonahle ^rounds for lielief in its truth is init 
sufficient : in other words, in an ju'tion of deceit the 
plaintitV nmst prove ;ictual (lisliont>stv. not mere ne'di- 
"jence or lilumleriiiv. 

If the representation in fact he framlulent within the 
delinitioii ahove uiven. honesty of motive in makin'f it 
will not he an answer to an action of de< cit (J). 

A false repre.sentaticm upon which an ai tiou foi' deceit 
could not l)t^ ftuindeil. may neveitheles.s he actionahle 
if it is made in hreach of fiduciary duty oi of a contract 
to e.\erci.s« due care (<^). 

(<•) (1889), 14 .\|)i). CiH. ;{37. 

(</) I'olhili V. i\nlUr (\H:ir>), ;! H. & A.l. 114; t\'^ltr v. Cliuihs, 
7 Bing. 105. 

(e) Xoctoit V, .4,v J.iirtuu, [Htl4| A. (". 'Xi2. 

U. L. f 


3. A lioprcseiiliitlim Inlotdcd hi/ tlie Malcr to he 
Ach'iJ upon hfi the Pmlij Misled hy it- " A mere naked 
falsoliood is not eiiouuh to uive a rii^lit of action. Init if 
it be a falsehood told with an intention that it should 
be acted iijion by the party injured '" fit is sufficient] (/ ). 
Tn the case of Lnvfiridjie v. Lenj (ij). defendant sold a 
i;un for the iis(> of a ciistoiiier and his sons, one of 
these beinu the iiliii?itilT. The ^un burst and injured 
the pliiintilT. and this intion was brouuht to recover 
ibunaues for fraud in dfS( ribinii the yun. it was held 
that tlie pliiintilV could recover, for the jury iiavin*; 
found fraud, and th<^ uiin bcini^ io the defendant's 
knowledi;*! for the ns<- of the plaint i If as well as for 
that of the actual custonu'r. the fraudident representa- 
tion was intended to be acted u])on by the plaintiff. 

A co)U(Msc case is that of Peck v. (iurney (//), where 
fraudulent statements beiuLi; made in a ])ro.spectus, an 
action was l)rou^ht bv some .shareholders who were not 
ori^iinal allottees. It was decided that no action would 
lie, as the ])rospectus was only intended to be acted 
upon by orii;inal aj)plicants for .shares. But when it is 
proved that the piospectus is issued, not merely to 
induce applications for allotments of shares, but also to 
induce persons to buy on the market, those who buy on 
the faith of the prosj)ectus are entitled to their remedy 
for false statements in the ])ros})ectus which actually 
deceived them (/). 

The law is. tluMefore. as stated by Wool), V.-(^, in 
linrrji v. Croskeij (k) : " Kverv man nmst be held 

(/) Pakki;.<H.. in l.ntn/n\l,jr v. Uvy (18:J8), 2 M. \ W. r.l'.t, 5:51. 

((/) (18;J8). 2 M. \ -VV. .lilt : 4 M. &\V. 337. 

(A) (1873). L. R. ti H. L. .377. 

f(i AniJififs V. Mixkfuril, '\H\U\\ i Q. S'.. 37-. 

(/.) (is(;n,-'_>,i. \' H. 1. 

False REi'UESKNTATroxs. 


responsible for the consequenco of a false representa- 
tion made hy him to another, upon which a third 
person acta . . . provided it appear (hat such false 
iep)escntation was made with the direct intent that it 
should I)e acted upon by such third j)ers(m in the 
manner that fK'casions the injury or loss. The injury 
must he the inmiediate, and not the remote consecpu'nce 
of the reprtwentation ma«le "" (/). 

4. The RcpresenUitlon must Adualli/ Deceive. — If the 
promisee is not deceived by, or did not rely on the repre- 
sentation, the contract cantiot be nudone on the j^round 
of fraud (//i). Thus, a purchaser did not examine his 
purchase ; it contained a flaw, which rendered it w^)rth- 
less, and this flaw was actively concealed. It was 
decided that an inspection not beiui; made, and the 
concealment not having afiec. . the mind of the 
purchaser, he could not maintain an action for 
deceit (n). 

It has been attempted tipon this ground to set up 
a defence to an action for fraud, where the plaintiff 
actually (ixamined the facts, or had an opportunity of 
so doing. In such a case, if lie relied on the repre.sen- 
tations, the fact that he also looked into the matter will 
not necessarily aiTect the case ; but if he did not rely 
on them, of course there is no remedy on the ground 
of fraud {()). In Redgrave v. Hurd (p), Jessel, M.U., 

(/) I'his statement haH received the a|)probatioii of Lord (!aihns in 
Pfik- V. (Iiirripif (187H), L. R.-O H. L., iit p. 4i:i, and of the Court <if 
Appeal in Amlrewn v. Mockford, supra. 

(m) Smith V. Cluuiwkk (1882), 20 (.'h. 1>. 27 ; !» Ai)p. ("iis. 187. 

(//) Hor^Jall V. Thaitm.i (I8«2), I H. Si V. 1)0. 

((») Siiiilh V. Land and Hoiuie Proptiii/ t'urimmtiuu M88A). L'8 
( ii. I). 7. 

(/<) (ISS2). 20 ell. ]). 1. 

100 (Jkneral Vikw of thk Law or Contkacts. 

: aid that, it the lepresontatiou was luatPiial, it was an 
itiferpnf'e of law that it. induced him to enter into the 
contract, but with this Lord Blackbi'RN does not 
aj-ree ; he thinks the question to be one of fact (q). It 
is certain, that ii statements are made, there is no duty 
cast on the other paity to look into the truth of them. 
'■ The representation once made relieves the party from 
an investigation, even if the opportunity is afforded '" (r). 
But perhaps there may be cases in which circumstances 
of suspicion may p\jt the party upon inquiry, and make 
it his d\ity to inquire (r). 

5. Danuige must have been Suffered. — Without this 
the fraud may exist, but no action for damages can be 
brought in connection with it ; " fraud without damage 
or damage without fraud " does not give rise t(» an 
action of deceit (.s). 

Ue}mdies. — A defrauded person has several remedies 
open to him. He may (i) rescind the contract (with 
or without claiming damages {t)) ; (ii) resist any action 
to enforce it, and obtain a declaration that it is void ; 
(iii) he may affirm it, and bring an action for damages 
for the fraudulent rejtresentation. 

A partv who elects to rescind, must do .so within a 
reasonable time (m). '* If in the interval, whilst he is 
deliberating, an inn«»ceut third party has ac(juired an 

(7) Sinilh V. Chuilirkk (1884), !» App. C'aa., at p. 19(i. 

(r) Hahoai-LAY. L.J., ill hidgravt v. Hurd (1882), 20 C'li. 1>. 2a; 
and see Dubdl v. ,S7hk/« (1824), 3 B. & C. 623. 

(h) Hausbury, I-.C, in Ihrrtj v. ftck (1889), 14 App. (.las., at, 
p. 343. 

(/) HowE.N, L.J., in Siii'biiiijiiKj v. Adam (1887), 34 (,'h. 1)., at 
p.' 592. 

... (m) Onkes v. 7'«r7Ma«t< (I8ti7), L. K. 2 H. L. 325 ; Vtnlml VentzueUi 
Hiil. Cu. V. Kisfh, ibid.,W. 

FAL6ii Representations 


interest in the pioperty, or if in consequence of his 
delay the position even of the wronjj;doer is allected, 
it will preclude him from exercisinj^ his right to 
rescind " (x). Lapse of time will always be construed 
favourably to affirmation (y). The contract remains 
valid until it is actually rescinded (z). 

It remains to add that by s. 6 of Lord Tenterden's 
Act (^0- '10 action will lie on a representation, thouj^h 
false and fraudulent, as to the character, conduct, 
credit, ability, trade, or dealings of any person, made to 
the intent or purpose of enabling such person to get 
credit, money, or goods, unless the representation be 
made in writing signed by the party to be charged there- 
with. The section was passed to prevent evasion of 
the requirement of s. 4 of the Statute of Frauds (6), that 
guarantees must be in writing, by alleging that an oral 
re[)resentation was made fraudulently and suing for 
damages in an action for deceit ; and Lord Tenterden's 
Act applies to frauduletU misrepresentations only and 
not to matters based upon any contractual or other 
breach of duty (c). The signature of an agent is not 
sufficient to charge his principal ; and the protection 
extends to incorporated companies (rf). 

(.c) dough V. LouLua aiul Xorlli Wiittiu ti(nl. Co. (1872), L. li. 
7 Ex. 35, quoted with approval by Lord Watson in Aaron n Reefs v. 
Twins, [1890] A. C, at p. 2i)0. In couseciuencc of this rule a shareholder 
itanuot get rescission on the ground of fraud, unless he starts proceed- 
ings before a winding up {Oakes v. Taiqaand ( I8t)7), li. R. 2 H. L. 3-5 ; 
lieesc Riixr Silver Mining Co. v. Smith {liHi'.)), L. R. 4 H. L. 64). 

(//) See pf.r Lord IJavkv, in Aaron's Hcrfs v. Twi-^s, [18'JliJ A. C, 
at ji. J'.M. 

(;) Rill r Silir.r Mining Co. v. Sntitli, supni. 

(«) !t ( ieo. 4, c. 14, s. <). 

('') .[ntr, p. 5. 

{<■) Biiii/iHii/ V. Hmih of Monlriiil, \ |'.)|S| A. C. (»J»i. 

{:!.) Hird V. Wed liidmg Union Ranking Co., LtintUJ, [i'JOIJ 
•: K. B. 500. 

1"J (iKM;i;\|, \ ItU «•!• THK liAW Ol" CoNTKACr.S. 



(ii) Innocent Misrepresentation. 

Af ciiiuiiM'ii law (oxcopt in contracts rccjiiiiinL; (lie 
iilMiMst. u;<n)(l tiiitli). in ordor to (>btain r«^sci,ssion of a 
contiact on tlio ;^ronn<l of inisroprcsontation. wilful 
falsehood must have been sliown. In ('([uitA- it would 
(it seems) have been sufHcient to show that the state- 
ment was nuitorial and false, thouuli not nccessarilv to 
the knowlcdjie of the maker (f). and relietl on by the 
injured party. At. one time there mijiht have been a 
doubt as to this, but the tli( ta in licdyrtirc v. I/unl 
have been accepted as law. quoted with ajjprova! ( / ). 
and are now re^'ardcd as accurately statin;: the law. 
And since the Judicature Act. 1873, the equitable rule 
prevails. Innocent misrepresentatioi. therefoie, of a 
material fact, will entitle the injuied party to rescission, 
though not to damages, if he make his a|)plication in 
^'ood time (;/). But an executed contract for a lease (h) 
oi lor the sale of a chattel or chose in action cannot be 
rescinded on the ground of an innocent misrepresenta- 
ticm (t). except in cases where there is a fxhu iary 
relationship between the parties (k). 

The party wlio takes advantage of his ri,L:ht to rescind 
a contract on the tiround of innocent Jiiisr'^presentation 
cannot recover damaiics, but he may insist on bein<i 
i<'s1ored 1(1 the position h<' nccuitied before he entered 

(0 Jksski,. .M.H., in l{ul(/mve v. Jlunl (1«82), 20 Ch. 1). 12. 

( / ) See imr IJowkn, L.J., in S tui>iijtjing v. Adum (1887), 34 Ch. D., 
at p. 593. 

((/) Erliiiiijrr V. \tw .Somlin lit P/ionpliuli Co. (iHTh). 3 Aiin. Chs., 
at p. 127'.». 

{h) Angel v. Jay, 1 1911] 1 K. B. WHi. 

(i) Scddo)'. v. yoilh. EnMirn Salt Co.. [l<K)r»j 1 Ch. :{2l> ; r/. SnUl 
\. (■vitbon, [llt03J 2 Ch. 24H, i>oM, ].. I(»7. 

(k-) Armitromj v. Jatlcnon, [1917] 2 K. B. 822. 



iii(i» the contract. In Adnin v. A'cubijinin;/ (I), tin; 
icspondcnt, who was induced by innocent ntisn^pie- 
sentation to h«'('onie a partner in an insolvent business 
with the apiit'lhuits, was held entith'd on rescission to 
repay nier f his capital, tlioii^h the business, his share 
of which ne restored to the appellants, had then entirely 
failed with lar^e liabilities. This case seems almost 
inconsistent with the ml*' that rescission will not be 
u;ranted unless complete restitution can be made ; if 
the decision is not bas«ul upon the fact that an " insol- 
vent business " is the same thin<i as a " more insolvent 
business," the rule must be taken not to apply to 
deterioration which is the result of inherent weakness 
in the subject-nuitter of the ccjntract. On the other 
hand, in LtKjiiuds Nitrate Co. v. L<i;iiiiuts Si/ndimle {rn), 
lescission was refused where a chanjie of position had 
resulted from the plaintiffs having worked certain 
nitrate deposits which they had puichased from the 

As a rule, it is not the duty of parties to a contract 
to disclose every thinj^ which may affect the jud<,'ment 
of the opposite party in deciding whether or not to 
enter into the contract, provided that this silence does 
not cause the statements made to be actually false (n). 
Rut there is a certain group of contracts which are 
voidable by a party misled who entt^is into them unless 
each party has disclosed to the other every material 
fact within his own knowledge, or that of his agent, at 
the time when the contract is made (o). These are 

{I) (IS88), 13 App. Cas. 308. IScc also Anudliuiiy v. Jiicksuii, 
■!»/»;■((, where rcsci.ssion was griintcd luitwitlistaiuiiug a fall in the 
valuo of :sli«r':7 whkli hinl Uf-cn snlil t" thi^ j.hiititifF. 

()/») 1 18'.ty I 2 Ch. 3!t2. (/() See ii<it<, p. W. 

(o) Blackbuin v. Vigors (1887), 12 App. Las. 531. 

101 (jlEiNEKAh VlKW ()!• THK LaW ()!• < OMKAClii. 

atylnil ((iiitiiicts iihirriiwr Jidci. Tlicy iiu lude all 
n>nlriu<s of iiLsuiaiicc (y<), and un^ not limited to inn- 
1 1 .Ills of marine, tire and life {(/), insurance; contracts 
for the !<ale of land in some respects (/•), suretyship 
[who'.e there is misrepresentation or improper conceal- 
ment as to the relations between the creditor and the 
principal debtor (s)\, contracts to take shares in com- 
jtanies (/). and partnership. 

There are a few exceptions to the rule that an innocent 
misrepresentation will not ;:ive rise to an action for 
(lama;^es ; for instance, an a^^ent who induces another 
to deal with liim. innocently statint: that he has an 
authority which he does not possess, may be liable in 
daniaues to those who act on and are injured by the 
misrepresentation (ii). 

But a mine important exception was introduced, in 
fouseqiience of the decision in Derri/ v. Peck (x), by 
the Directors' Liability Act, 1890, tlie provisions o£ 
which were re-enacted by s. 84 of the Companies 
(< oiisolidatiim) Act, 1908. The Act applies only to 
.statements made in a piospectus invitin;,' persona to 
stibucribe lor shares in or debentures of a company, 
and entitles persons so subscribing on the faith of 
untrue statements to proceed for dama^fes against any 
of the following : (i) directors at the time of issuing 

(/)) Snitoii V. lluttli, I l6i»l»J 1 Q. B. 78:;J ; 4 Com. L'a«. 11)3 ; reversed 
Hit tlie facts, ■■iiib iioiii. ticalnn v. liurnnml, [19001 •^- *'■ 135; .5 Com. 
lii.-i. 11)8. 

(q) IjOiido'i A-^f^Hiiiiii:<: v. J/(i//.s< 7 ( IS?!)), 11 Ch. i). 'M'.i. 

(r) Flight v. Bwlh (Ifi'M), I Hiiij;. N. C. 370. 

(.) PIUllip,s V. /•Vu-i//(lH72). L. H. 7 i}. H. titiO. 

(.) Cfiitnil ViiHziida hull. Co. v. Ki-'li (1807), L. 1!. 2 H. L , at 
]. ii:;. 

[11) .Sec /)() LlMil.hi, t/ .1 , III Itihaid .1 L.i'i"l'>i^ v. Huntfthii ifj 
(lS8n. IH (J. B. I)., at |). 112 , ami jio^l, [<[>. 110, I II. 
(.r) See anU, \)[>. ',»<>, '.t;. 

False Kkpuksentatidns. 


IIh! {)i(KSi)C(tiis ; (ii) persons who havo authoiistMl tluMr 
names to be [»lae«(l on a prospeetus as Ix'in;^ directors 
or as liavinji aj^recd (at once of after an interval) to 
become directors ; (iii) promoters — i.e., [tersons bein^ 
parties to the preparation of the, prospectus, and not 
lieinjf enj^aued in sucli preparation merely in a j)ro- 
fessional capacitX' ; (iv) any person who authoris(Kl the 
issue of the prospectus. Liability may l)e avoidinl if 
the party attacked shows tliat he had reasonable j^round 
to believe in the truth of the statements contained in 
the prospectus ; or that he withdrew his ccmsent to be 
a ilirector before the issue of the prospectus, or that the 
prosp»!ctus was issued without his kuowledj^e or consent : 
or that the prospectus beinu; issued without his know- 
ledge or consent, he at once, on becomini^ aware of 
till! issue, uave reasoimble public notice that it was so 
issucnl ; oi- that after the issue of the prospectus and 
I)efore allotment under it he became aware of any 
untrue statement therein ami j^ave reasonable public 
notice of the withdrawal of his consent thereto and of 
his reason for so doin^. Moreover, the directors and 
other persons refeired to kbove, may successfully defend 
themselves if they can show that the false statement 
is a correct and fair copy of or extract from a public 
ollicial document, or is a fair representation of the 
statements or report of an expert ; though if any 
person had not reasonable grounds for believing in 
the competency of the expert who makes the statement 
or report, this last ground of defence is not available 
to him. 

An action against diiectors and others under s. 81 
(if the ('o!ii[»anies (Consolidution) A«'t^ 19"H, i,s ttn action 
of tort to which the maxim actio personalis moriiur cum 

I'lr, (ii;M;i;\i. \ii;\\ <>| IIIK l>A\\ oi ( '(»M i;.\('is. 

jHfsotm ii|H)li('s. iiiul ( mist'tnu'iitly lU) iutioii will lie 
auiiiiisl tilt' cxt'iiilor tit a jti'isnn who has iiiiiiU^ siuh 
iiiitiiiti .statt'iiifiit iinh'ss property tu the valiif or jMtt- 
cffil-s ol pitipt'itv l)t'loiii!iiii; to tilt' pt'isoii iiijuivil has 
hfcii atUlftI to the fstatt- tif th»' (It'tt'iist'd toittVasor (//). 


The nilo t»t law has been thus statotl : " 11. whatevci 
a inaus real iiiteutittu may be, he so etiiulucts liiiiiseU 
that a reasonable iiiau would believe that he was 
asseiitiui: to tlie terms proposed by the other party, 
and that other party upon that belief enters into the 
eontraet with him, tlie man thus conducting himself 
woultl be et^ually bound as if he had intended to agree 
to the other party's tenns " (2). 

JJut it may happen that what is appaiently a contiact 
is, tiwing to mistake, no contract at all ; conset^uently 
ii(» rights t)r liabilities arise from the transaction — 
t'.'/., when the thing bargained for does Jiot exist {a) : 
in the case of error as to the person with wliom the 
contract is made, whenever his identity can be regarded 
as important {h) ; where there is a mistake as to the 
itlentity of the subject-matter ; for in all these cases 
the two parties liave never been ad idem. Tlius, where 
A. agreed to buy of B. a cargo of cotton, to arrive " ex 
Vtcrless from Bttmbay," and there were two ships 
which answered this description, the one being intended 

(,7j tlitiid V. I'mch, |1'J171 i til. lUS. 

(:) Sintlh V. llurjlti-^ (1871). I.. II. (i Q. IV, per Hi.AcKiii UN, J., at 

|l. liU7. 

(«/) SlticLUiiiil V. '/'(/»■«(•/• (I S72). 7 lv\. :20S. 

(/.» Siiulli V. W Imiixynjl (IS7S). '.) Ch. I). 'IIW ; . /. (i-i-lon v. Vi-', 
jls'.tiil J (J;. |{. (ill, wlicii: a iiutork » moiicyl''iii|(i Ii.iuilulcully 
ijoa* calcil lii'5 iili-iitily, aiiU the cuuliact wua avoided. 



In- A., iiiid llif otluT l)y !>.. it scfins tlicrc was im ctni- 
liacl (<•). Ill this <iis(' the coiitiiict as rxpicssfd r«m 
liiiiu'd a liitcnt aiiihiiiuily. It apjiliod f»iuHlly wt-II t<» 
two subject-matters, and if each party, doiii^i nothing 
to mislead tlie other, underst«»od it diiTereiitly, there 
seems no ground upon which the interpretation of one 
shouUl be preferred to tliat of tlie otlier. If, liowever, 
tliey had botli meant the same vessel, b\it had called it by 
an erroneous name, the contract would have been L'ood. 

If two persons enter into a contract and understand 
the, contract in a dilTerent sense, it will be bindinti, 
unless the party who tlesires to support the contract 
has, however innocently, by his conduct induoetl the 
mistaken Ijelief of the other party as to the real meanin;^ 
of the contract made. Thus, in Smith v. Hughes {d), 
X. bouj,dit oats from Y., the oats were new, X. tlioujiht 
ho was buyinjf old oats ; it was decided that this alone 
wouUl not exonerate him from perfoiniin^ the contract, 
the seller havin<i done nothmji to induce the mistake on 
the part of the buyer. 

If a mutual mistake on a material matter is established 
to the satisfaction of the court, the contract may be set 
aside, althou;,^h completed by assij^nment (e). 

The above rules are applicable when the mistake 
is one of fact ; if there is a mistake of law, the lule 
is IijnoratdM juris nemincin excustit (/). Thus in 
Kitchin V. Hawkins {<j), the defendant called a meetin;^ 
and proposed a composition, which was accepted by 

(- ) Jlafflrs V. Wichdhaua (1804), 'M L. J. E.x. I lit) ; 2 11. & ('. \H»\. 
(d) (1871), L. K. t) Q. B. 5!»7. Sec also WiUtiinj v. .'Sanihiwn, 
lS'.t712Cli. .1:11. 

(r) ,s-,„// V. r-..//.v,», i i:H.):ij 2 fh. 2VX 

if) Uilliic V. /.r,, /,//(! 802), 2 Ka-t. l(i',M7l. 
(7) (18ti7), L. U. 2. C. 1*. 22. 

1<»,S <il,NI,l<.\l, \lK\V »•!• niK ii.VW ni' CoNI'HACrs. 

iHMilv all llir cirilitois. 'I'lic pliiiiitins iliil nut iMtnscnt, 
Imt iutiii.: iiinln' the iiii|ir*> llmt tlicv wfic Ixniiid 
l»\ I lie tlffd iuicptotl by tin; ie(|iiiir(| iiuiiilxu' of 
cu'dilois. lliev took tlu'ii shaio oi tin*, ('oin|Misitjoii. As 
H liicl tlif <l<M'(l was V(»i«l, lint tlie court derided tliHt.tlie 
plaint ills weic neveiilieless iMtiirul Ity their a>;nH'iii«'nt 
to (ak<i less, lor their mistake " was no inistaki! of fjit-t, 
hut only a mistake up<ui a nice point of law." 

In e(piity, and siiue the Judicature Act, IJST.'I, etpiity 
prtnaili. the rule is somewhat less Htrict. Jamks, L.J., 
in El jmrh' .Idtues (//), said that the principle must not 
\h' pressed too far ; and the Judicial Committeo liave, 
in thi^ir judgment in Ihiiiicll v. ,*<iinl<ilr (/). expressed 
themselves to the same elVect. " In eipiity the line 
UetwtM'u mistakes in law and jnistakos in fact has not 
heeii M) I learly and sharply ilrawn " [as at couimou 
law |. 

A distinction has been taken between mistake caused 
l»v ignorance of a general rule of law. and that caused 
by i^niuance of a particular ri-jht ; tlie contract in the 
latter case being liable to avoidance. " When the word 
JUS is used in the sense of denotini,' a private right, that 
ma.vim (k) has no apidication. Private right of owner- 
shi[> is a matter of fact ; it may be the result also of 
matter of law ; but if the parties contract under a 
mutual mistake and misa|)prehension as to their relative 
and respective rights, tin- result is that the agreement 
is iialtle to be set aside as having proceeded upon a 
ciiHuiion mistake. X(»w that is the case with these 
parties; the respondents believed themselves to be 

i/ij (IsTI;, i/. i!. ;m ii. .\|i|). i>o'.t, till. 
I') (ISSI). (i App. Cits. LSI, l!)U. 
{/■) I<iiti>niihliii jttiia hntid ixcttaul. 

liNDIK ImI.I'KNC K AND Dl'RKss. 100 

entitled td the |M<>|)eity, the. petitioner helieved that he 
\V)is ii .stiaimer to it., the mistake is disrovered, and llie 
Ui^reenieiit ( annot stand " (/). 

Remedii'H in ('ascn of Misfnh'. — At ronitnim hiw the 
remedy is re.sci.ssitm when the eontiart is .still exectitorv 
and the sfutiis tjiin can 1)0 restored ; and money paid l»y 
mistake of faict may he recovered. \w equit^ there is a 
rit^ht (»f resci.ssion, or in .s«)me nt r< . titication. 
Where the mistake is not mutual, the remrdy is 
re.scission, Imt the court may offer the other party what 
the party making the mistake intended to ;.'ive. and 
upon the ofi'er liein;4 accepted, order r. . lilimtiou iii-t<Md 
of rescission. 

llNhHK Inpi.jikncr .\\'I» I)|'KKS,««. 

Undue influence is the improper of any |)o\ver over the mind of a coi!*>actiu:j party, and 
it mav in all cases he jiroved as a fact {in). Moreover, 
according to the doctrine ex[)ounded in /ini/iifnin v. 
Hatu'lffi (».), undtni intineiu'e is presumed (in the 
ab.sence of rehutting evidence) in all cases where 
t,he relative position (»f the parties is such as to 
render it prohahht that such influence exi.sts and has 
been exerted ; <'.</.. between solicitor and client, trustee 
and ceMiii (/ue trust, giutrdian and ward, etc. Hut the 
relation of hnshand and wife is lutt one of those to 
which the doctrine appli«^s («). Duress is actual or 
threatened violence, or im|)ri.sonment. In cases of 

(/) Lonl Wksthurv, in C<>oyj«r v. riiM/> {iStil), L. II. -2 H. L. UM, 
ITU; aiulsM- Kail b>..imhinnp v. Wi'in (I87:<). I. K ti H I, l'l';!. 
{ill) Smilh V. A'rty (I.SfiU), 7 H. I.. Ca*-, at. \>\<. lis. ll'.\. 
(ii) (I SOT), 14 Ves. -ll.l. 
(..) //i.//vs V Hiihnii, |h«K»l 2 K. H. :(!M). 

11(» (lr.NII!\I, \ II U or TIIK liWV •»!■ ('l»\TI!\<'IS. 

uiiiliK' iiilliit'iii f himI «liir<'<^ tin' law niiisith'r.H tli;it 

(•tiUscllt is Mot lli'«'l\ jivt'll. illlil it illlnWS tilt' llilltiat t 
tti III' iivoidftl iit IIh' will ni tin- |iait\ (ticici'il; the 
rtiiitrart. ran .siiltsnuifiit Iv lit' made '^noil il lutitivd 
wIhmi tliat |tiirty is iilisuliilt'ly free f'luin I lie iiifliiciu*' 
or powtT. \Vln'tlit'r tin' rocrciuii iiiiioiiiits to diiK'ss 
d('|t(>nds iipiii) tlic lads nf ciicli |iiirl.iculiir ciis*' : '" wlioii- 
♦'VtT fnim tiivhiral wraKiicss of intcllctt or from fear — ■ 
wht'fher rcasoiialtly t'litertiiiiicd or i\ot either party is 
in a state of mental incompetence to resist pressure 
improperlv Iddiiulit to Itcar, there is no more consent 
than in the ca^e of a person of stron'ier intellect 
anil more rolmst coiira-ii' vieldinir t(» a more serions 
ilani'cr " (//). 

FoRF.roN Law. 

donjlirl of Loii'n. — \ dis|)Ute sometimes arises as to 
what is to he the law hy which a contract or some part 
of it is to he mtverned or applied. The uncertainty may 
he hrought ahont hy a variety of causes : for instance, 
the ctrntract may he entered into in one country witii a 
view to its heiii!^ wholly or partly performed in another. 
at\d the laws of the two countries may materially differ 
as to the validity or etTect of one or more stipulations 
in the contract. It is inipossihie either to exhaust the 
circ\unstances which may f,'ive rise to the dispute or to 
lay down hard and fast rules for the determination of 
any particidar case, hut all the authorities agree that 
tlu^ })oint to he ascertained is — what was or must he 
])resumiHl to have heen the intention of the parties with 
respcil to I he (iiimtrv the law of whicli i.s to i;ovciii 

(/.) I!l TT, J., ill S,i,tl V. S.hri.jhl (1887). 12 P. J». ut p. i;4. 

KonF.icN FiWv. 


I lit' I uiitiact ? Anv pK'smiiptioin or |iiirii;i f.u i(> rul«»s 
which hiiv«' I'min tinu' ti» timo hcfii cvulvt'd l>v t«'.\t 
wiifi'ix or Ijiid (h»\vii in (|<'( idod cust's aiv hiiIi-Iv diir<tt'»l 
III ihc ascfitiiiiiiin-iit III this iiili'iitiiiii. 11. must iilwiivs 
Im' :i iiiiittcr of (((iisf iiutinii of th*i rniitriict itsolf us 
riMil hv \\\t' Vvj^hi III llii^ .siil»ji'ct-miittfi- iind tln^ 
siirrouiidinu (•iiciiniHfiiiu th. The must sjitisfiictoiv 
I'vidciUMr o[ till' intent itiii »if the piirtii's is. of ((iiirso. 
till' liiiiunii'jtc of till' (Kntriut, iUid it is mdy where this 
leaves the i|iiestion in doubt tluit there is iinv oecasinn 
to resort to other coiisideriitions : thus, where ii contratt 
Wiis entered into in Knu'l'ind between unities residing 
in Kn^'iniil iin«l Scotland respectively. Init wiis mainly 
to he performed in Scotland, the House of Lords 
largely based their jud<jment upon the following 
clause in the contract : " Should ativ dispute arise mi) 
of this contract tiie sanio to be settled by two members 
of the liomhm Corn Kxchanije or their umpire in the 
usual way." This was considoreil to be a clear indica- 
tion that the. partie.s contemplated that the. contract 
shouhl be, interpreted according, to the rules of English 
law (7). 

Where the doubt is mtt removed by the laiiL^ufige of 
the contract, the broad r\ile is that the law of the 
countrv where the contract is made presumably i^overns 
the nature, the obligation, and interpretation of it, the contrary appears to be the intention of the 
parties (r). The very manner in which this rule is 
stated shows that it is one which may have to give way 
to other considerations of more weii^ht. The place of 

(7J ilimUyii <{• Co. V. Tali/ikii DUuiLiy, [lsii4j A. (J. 202. 
(;•) JiuvttH V. (.'rttlU Li/oti)i>iis (1884). li Q. U. D. r.S(» ; In re 
,W,«„„ri .S<<«;«v/n> (.'0. (i8H!»), 42 ell l>. :I2I. 


])tMfiirinan(e is a v»mv material fact. " \n most rasos. no 
doubt, wlioie a contract is to be wh<t)ly ptM-forniod abroad 
the reasonable presumption may be that it is intended to 
be a forci<<n contract determined by foreign law ; but this 
]nima facie view is in its turn capable of beini,' rebutted 
by the express or implied intention of the parties as 
deduced from other circumstances " (,s). Even where a 
<ontract between Kniilish subjects is to be whollv or 
partly perfornuid abroad the parties mav onlv havo 
inteniled to incorporate the forei<fn law so far as the 
regulation of tlie method and manner of performance 
alnoad was cinicerned. without alterim; anv of the inci- 
dents which iiltach to the contract according to Kni;lisli 
law. Ill Jiicdlis v. Ciidlf l,i/nnntiis (t) a contract was 
made in I'lii^laiid between Kiijilish resident houses 
lor tlie sale of ;i lai^e (piaiitity tif yoods t(» be shipped 
l»v a French company at. a port in Algeria. Owiiii; to 
an insurrection in .\li;eria the «>xp(»rl of tliis particular 
men liaiidise \v';is forbi«lden by the authorities there, .-it a 
time when the citntiact had not l»een whollv completed, 
thereljy renderin;^ further performance im})ossible. 
AccordiiiL' to the law of Algeria this would have 
tfxciised further perforniiince. It was. however, decided 
that the contract was an Km^lish contract, and the 
obligation to deliver bein>f absolute the 
impossibility art'onbnl no defence to an action for 

Other material con.siderations, besides the place where 
the contract was made and the place of perfoni.ance. 
iiijiv have to be tiiken into account, such as the residem e 

I i 

( >) I'll- I'miWCn, I,., I., in ./i((((/)s V. Cinltl Lyoninii.i, mipr.i. iit 
p. col. 

/) I\ss4), 12 g H l> 5s!i. 

FoKRinN Law, 


(if the ('(mtractinii; |tarti<\s. the fi ^f the oontrart, its 
stiltject-matter. the thiii'i'^ 1<» he »i ■ and the occurrence 
of a .sti{)ulation whicli is vahd a^ <.i«lin;^ to the law of 
one country l>ut unenforceable in anotlier. Presumably 
the parties would have intended the wliole of their 
contract to be enforceable, and the existence of such a 
stipidation as that last luentioned wo\dd be coticnt 
evidence that the parties were lookint; to the triiiunal 
whicli would (Mdorce it (ii). Tiike the other presump- 
tions, it is not conclusive. Other things beinj; equal, 
preference should be jiiven to tin' law of the place with 
which the transaction has the most real connecti<in (u). 
.\nd where the residence of any party is material, actual 
and not nominal residence is to be considered {<>). This 
is especialK important in the case of companies 
reifistered in one ci»nntrv and carivini!, on business in 

If the I'jiulish conrts decide that, a contract is to be 
'.governed bv the law of a foreign ( onntry, and the 
contract, contains a stipulation valid by the law of that 
countrv. but unenforceable by Knulish law. the exact 
nature of the stipulation has a furtlicr impctrtance. If 
i<. <•'«!!( r.)\e!>.>.; .-iome essential principh^ of j\istice or 
moralitv. as recounised bv tluf conrts of this country, it 
will not. be enfon-ed (//). and if. though not immoral or 
unjust, it is in direct cojdiict with tieeplv-rooted and 
important considerations of local policy, the reco<4nition 
of it will be e<|ually denied. Otherwise, effect will in 
most cases be !^iven to the stipulation, even thom^h it 

((/) //( rf. Mi.iiiiini Slmmihiit Co., xiipra : ami rf, Simlh Afiiinii 
l!rf ii'<ri>><. lAmileil \. Aim/, | lH!»lt| - »'li. \~'^. 

(.1) Simth Afiiidii Itiiinriis, l.imilid v. Kiiiff. initra; Weillal^f's 
I'livatf liit*-riiali>'iial Liivv iTitli eil.i. at p. :i(».">. 

((/) K.vijnfn, \ r;,,.„», ll'.HMj I l\. 15, .-.!l|. 

Ill (iHNEPM. \'ii:w or I'lii: Law oi' CoNTKAcia. 

would he iiiitMifurcfiililt' if (ontiunoil in an Kni'l:<li 
••(intract (c). 

On tilt; titlifi' liiiiid. tint Kn'jiisli niiiits will nut 
r«>c(»«^nis('. a disiiliilily or «lis(|Uiilili(jitinn arising I'loni 
v\ni piimiplcs or ciistiiiu or posilivc law of ii [orcimi 
country, I'spt'cially if it. is of a i»»ina[ natiirc. providi'tl 
tliat it is not, Ktutwii luMf. Tlins, a prrson adjudircfl hv 
a KrtMirli court to he a |ii(idinal may l»c proliiUitcd from 
• It'alinn with liis |)ro[><'rty without tlif assistance, of an 
advisor appointed hy that court. Such a prohibition 
wituld not, h(tw«n'er. prevent him from ohtainiiiif oi' 
dealinir with property l>eloni;in^ to liini in Knyland (a). 

In lik«* manner tlui English courts will not re- 
ci'LitiirtC. the law ol a foreiiin countrv imposing a 
persouid liidiility on the sharehoKh'rs of an Kniilish 
limitetl compauy. which incurs debts in trading ahroail : 
because such a liability in respect (»f the companv's 
debts is inconsistent with the limitation of the share- 
holder's liability according to IOm;lish law, aiul that 
limitation is the Ic^al basis of his relation to the 
company (6). 

Whatever law governs the interpretation of the 
contract, anythini^ which relates to the nuiiedv to be 
enforced must be determined by the lex fori, the law of 
the Countrv to the tribunals of which the ap|)eal is made. 
The practice of those, courts must be followed, their 
rules as to the admissibility of evidence will ai»[)ly. and 
so will any provision which bars the remedy, such as the 

(z) Uamhin it: Co v. TnliArr UiMUni. [I8!»4] A. (J. 2(t2 ; In n 
Missouri .S7mm,v/ii> Co. (I.S.y.t), 42 Ch. I>. ;{LM. 

(a) Wonn-i v. Dc VaUor (1880), 49 L. J. Cli. 2til : l„ rr Selol's 

y'/Ms/.x, [i,sy2j 1 c'li. 4HS. 

(/() Hitilnii Iron and Loroiiuilivi: Wotkx V. l'iiriti-<s, |l!MMi| I K. H. 
4'.t. I'^KCfpt, (xTliiips, ill a case wIhtc a sliarclioliItT i'\|iii-.-~|\- 
:nitliori--iil tlif iliicilnis to |ilr(l^i' liis |k-isipiiiiI indil ((//). 

Forek;n Law, 


Statute of Limitations (c). If tlio roiiipdy is barred l)y 
lapse of lime iicectrdiiiu to llie law of tlie eountrv in 
wjiii'li enforcement is soii-lif . il does not matter that it 
is not so haried l»y the law o! llMM"(»untry with respect 
to which the contract was made (r). t'onveisely. an 
action on a foreii^n contract may l)e maintained here, 
even though the time has expired for enforcinj; the 
contract in the foreign citiintry. provided that the peri(Kl 
laid down by the Kn,i;lisli Statute.s of Limitations has not 
been exceeded {d). It woidd be otlierwise if the foreign 
statute destroyed tiie d«'bt as well as tlie remedy (d). 

Foreitin law will not be judicially noticed in the 
Kn'j;lish courts. It must be proved, as a fact, by 
tlu' evidence of a comjx^tent witness (f) ; but until the 
(lUilrary be proved, the general law of a foreign Stale 
is prtwumed to b(^ the same as the Kn,i>,lish law (/). 

Fnreifpi JiKli/nirnf. — The judgment of a foreign court 
having jurisdiction over the subjcut-matter, and the 
parlies biouuht before it. will be acted on here as linal, 
and may be enforced by acticm, provided that the 
proceedings are not in conflict with English views of 
natural justice, even though there may have been 
some irregularity in them (//), unless the judgment 
has been obtained by fraud (/i) or an Em-lish statute 
applies to the circumstances (/). The fraud of the 
plaintifi' in obtaining the judgment may be pleaded 

(r) Don V. Lipptiuihii (1838), .5 C. & F. I. 
(d) Harris v. Vw/ne (I8t)9), I,. R. 4 Q. B. «".:{. 
(. ) I'diuler Donkt v. Thelluson n849), 8 C. B. 812. 
(/) Dynamil Akliinge^Hichaft v. Rio !7'i»/()('«., | I!»ISJ A. ('. 2«U, 
2!>2 I't xeq. 
(./) fVtnl)erlon v. Hiiijhes, [1899) I Ch. 781. 
(/() VadiiUi V. Uwe.i(m)0), 25 Q. B. I). .UiK 
(/) //(»»/ V. Xorlhvnif. ( l<.HN)| 2 Cli. 2ti2. 

11 <i (ii.:M:it\h ViKW (»r thk Law ok Contkacts. 

jiH ;i (lotViKf fn ail iut'um biouiilit on the foreign 
jiuluineiit, fvi'ii thou^li it caiuutt l»«^ provod without 
re-trying i\u- (|uestii)ii jitljudicafed upon bv the foivii'ii 
• ourt (A). But it wouKl lie no (lef«>n<t' to an action on 
surh a juduim'nt that th»i loici.^n court had, aocordini- 
to Eui^h'sh hiw, put an ♦MToneou.s construction on an 
Ku'^lish < ontract (/). Th.! foiviiin court must liavc* had 

In actions m iMrsdiunn there jirc li\(' cases in which 
th«' (ourls oj this country will enforce a. foreimi jiidi;- 
uieiit : (') Where the defendant is a suhje( t of the 
forei-jn coiintrv in which the jiid-nient has I.eeu 
oltlained : (J) where he was resident in the loieiyn 
country when the act i..u hei^an ; (:J) wli:re the defendant 
in the cliaraiter of plaint ilT has selected the for\ini in 
uhich he afterwards sued; (I) wheir he has volun- 
tardy appeared ; and (")) where he has contracted to 
sidiuiit Jdiuself to the foiiiiii in uhidi jud-jrueut was 
I'litained (/), Jiiir ||„. ownership (,f piopcitv abroad is 
Mot aifhcient t.o i;ive thu forei-ii court juiisdicliou in a 
per.-oual action (/«). 

{i.) t.'iJaiU V. <.';(«// (l87 1), 1-. U li i). I'.. l:!'.», 

il) I'.manii.L \. Si/„n„i, [i\){ts\ I l\. |{. :t(l_', ut .".(Mt ; ;„ ,• l!l,. kl.KV, 
I-.. I. >-i- n\>,i) S(liilt.-(b!t \'. \i'i iUiiliiU {\Hl\), L. I!, t; l^. I'., laa. 

KVirr J I. 


.\\ Hi.'<?n(. or, as hr. is stvlcd in tlir old liooks, an 
iilt'.riK'N-, is '* lie. who is employed to do aii\ tiling in llm 
iiT {(i). ,iini t.lit! |>cisoii who cnijtiovs is 
h'd Hk' priniipitl. It must he noted, liowcvcr, tliat 
is nn(, mere eiiij)h,ym«>iit. hut emphiymeiit for 

a< (■ o| 




Ihe i)uii)(/>c of imttin- the |)tincipal into h',-al relati 


with oth 


Iti tit'atin^ of I 

w of auenrv. 

others will he styled third partit 
Aiients mav he divided into v 


ariuiis classes 


So I 


ne or 

the most inii)ortiint. together with the chief variations 
in their legal cliaiacteristics. will he found enumerated 

hereafter {b). Taking then 


lerallv, th' . 1 

uive heen 
( 1 ) Sjifcinl, 

tlivided by writ<'rs (r) into three classe 
viz.. those who have authority to do a speeitic act 

IV a particular thuii; ; (2) (Unrral, viz.. those who 


luav (h) anything ( oming within certain limit.- 
avi^nt to manage a Uu.sin<w.s ; (.'i) [Jniirr.s'il. viz., tl 
who mav do anvthin:; on helialf of their pijicipal. and 

lose authority is ludiiiiited. Thus, a u 

(") • ''iiiMij" l)i-i' I, Att,,iii.\ A 

iii\ ci.-aJ anient 



iiiity do iiiiytliin^ on holiiiH ot and Ijiiid liis |ninci|>;il, il 
oiilv it is l<^;;al and otlifrwist' tonsonant to I lie m'licial 
law of contraft.s ; a t;en«nal a^ent niay do IIk; saiiic 
within prescribed liniitH ; a .s))('f iai a^ent is tied down 
to tlie sp('( ifie act to perform which he is appointed. 
A man rii:i\- Jiave two businesses, r.r/., banker and tea 
merchant ; his general ai^ent in the banking-house 
would have no authority to contract on }ds behalf in 
the tea-house, and rice vemK ; l)is uidversal agent eouhl 
do so in both ; a inessensi; r wh(» is sent to ;;et [)osta;.;e 
>tainps cnidd bind him only in matters incidental to 
that purchase. 

Who ma^ ArpoiNT and m: Aitoiniku A(;i:Nrs. 

I'liose wl • cat il make (outracts tli> inselvcs (as to 
whom >st!e unlr. ». .'U c/ ,\vv/.) caMnot get i id of (heir 
employment of agents. Imt it is 
M ity fo contract loi' liimself will imt 
'•ni being appointed agent (o ( ontriirt 
iistarwe. at conuiu)n law a iiiiirried 
•' of ' ntractiug for lierself. but she 
-er a rhority, bind her jiusband by 
lis i Uf {d). 

di.sabilitio 'v 
settle.l that 
prevent a pr 
for at">thei. K 
wom.iu i- iti ap 
coidd u ' the 
ctxitract tade ' 

Al'!'«M> vlENT OF AtiKNTS. 

.\s a rule, no tormai mode of a|»[)ointnient is re(|uircd ; 
in fact, the vast majority of agenci«v-< an^ created verl)allv, 
often witli(»ut any ex|)ress arrangement at all. iind unless 
tlu'se were leco'^niscd l>y law, mercantile! business could 
hardiv ]Muc(-e.d. Hut if the ag<'nt is to h;tvc authority 

//) /;.'/ , fxi^il'ij \. io'./m tlsiis), L. 11. ;{ y. I'.. J.)','. 



t'l rnutuict iiiulcr Htuil, tlu! authority must Ik- uiuUt 
sciil. iiiid it is tlu'u calU'd a pow«'r of attorney, tliouuh 
tlu'. want of a dvrd will he of no avail as a dcfenco to a 
|iriii(ij)al wli(» is pitistuit and allows the aj,'cnt to enter 
into the (((Utiact for him («). Also, a deed is necessarv 
when the intended principal is a corporation, and the 
authority uivcii is to enttir into contracts whidi a 
corporation can only make under seal(/). In other 
cases wiitinn seems to be unnecessary for the due 
appointment of an agent unless expressly required Ity 
statute. Writing is required (and possibly a deed (y)) 
for the appointment of an ai^ent wliere the contract is 
within the provisions of ss. 1 and 3 of the Statute of 
l<'riuids, which relate to leases. Contracts within s. 4 
of the Statute of Frauds and of the Sale of Goods Act, 
thouifh unenforceable by action unless in writinjf, may 
be validly made by verbally authorised aj-ents (A). 

The foUowini; may be the methods of appointna-nt : 
f. Seal. 2. Parol (inchidinj; words and writing). 3. 
Implication arising from the conduct or situatirxi of 
the parties. Under this last head come such cases as 
the following : A servant allowed to purcluise oats 
for his master's horses ; tlie authority of a [tartner (»r 
wile to bind a copartner or husband ; an owner who 
sends horses to a repository for the .sale of horses 
authorises a bona tide .sale. Moreover, a person may 
so act as to be precluded from denying autiiority. Thus, 

(e) llnll V. l),intil,rdlk (IT'll), 4 T. K. 'Al.S. 

if) S.-<! null. |.p. 45, It). 

i<j) Sc-.- Ilciil l'rr)iicrtv .\ct, IH-t.".. s. .1. 

(/<) lli'i-jiiis \. Siiilw (IS4I), K M. Kk \V. S44 ; H'ukI v. /•///.// 
ilN"*'.»). I-. I{. 4 Cli. :,is. ((. ilic ('i)iii|)iiiiiis (OuiMilidrttii'ii) .\<t,, 
I'.'Os. - SO (J), wliii'li |ii'ii\ jili's (liiit iili ii;;<'ill to hi;;!! th'! 4'o|iy i)f 
.iii\ |iii),s|i( ( hi- lilcil ill iu'conhimi; witli lliu iciiuirciuciits of llio A'.t, Ijo aiilliuii^id ill wnliii". 



Ill I'ldrriHfj V. lliisk (i) n lni»k<'i whs niiplovfil li\ n 
iiifniiiiiit [it Imiv hemp ; I lie l)n»k<'i tlid so. iiinl. Jil tlio 
in<M-cliiUif,"s ic,|iiKst. tilt" liriiip WHS left at I lie Itiukri's 
wliiirf ; (ho iHukt'i- sold llm noods. iiiwl flic suit; Wii.s 
sii|»|tMii»'(| mi tiM' j^inmul fhiit flit! Itntkcr was flio 
iippiin'iit imciit, iiiiil fluif iUi'. iniMvlijuit was csfopiM'd Ity 
iiis niiidiict [?nni denying tlio ai;('ii«y. Smli Ji'^ciirii-ii 
liavr hi'c.ii styled a^tiiicitis i»y osfopju-l. 

It'idjioilinn. —XUhnvJi an aj;<'iir\ may \h'. iiom- 
cxistonf. at Mk; tiiim when the (((lit rait is tiiitiuod into, 
it may aris** and liti made n^tiospcctivt! Ity rtifijinitinn, 
i.r., adoption of the <'oii(iiut as made. Hut tlu-tc ran 
Im iio ratification unless in making; flic coiifiact (Ik; 
iiLTcnt pnrjioitcd to act lor or acted in tlio name of a 
piinci[ial. ami a contiact made l»y a person in Ids own 
name with an nndrvlared inftmtion that it should ho 
maili! oil hehalf of another, for whom he then had no 
authority to act, camictt he ratified (A). The principal 
must \n: in existence when the contract is made, and 
when ratifying,', either hav(( full knowledi;.! of the fads 
or he shown to have adopted th<! acts, whatever thev 
were (/). For tiies(! reasons a company cannot adopt 
or ratify a <'ontract entered into on its behalf before the 
company was iiuorporated (m) ; it may nud<e a new 
contract to tin; same effect, nnless such contract woidd 
he ullm rnes (>,) : on the other hand, it may confirm 
an allotment of sliares made, after its incorporation, by 

(() ( Isl-), l.» K.i.i, .;s. 

(<■) K'i'i/il'/f l/.ic/. / ,0 f,,. \ hnv'ii, I I'.iiM j .\. ('. _'|i», 

(/) .l/«)•^/i V. .In., j,h, IJS'.ITI I Cll. I'l.!. 

I'/M KrliK, \. Hn.,l,r (lst;7), |,. |;. j ( ■, p. 17,,, /•, .V,„//. .,/»/jf.;. 
/'(/(./.{..»(■<//,,/,/ r,.. I SMi). .i.i ( h. |i, |i,. 

{II) AUijxri/ <:,ini'ir c„. \ jc/,, iis/.j). L. i:. ; 11. i. <....; 



Hti irre;;ularly attendoii nuietiu;^ of dinHtois (o). If 
tlic- <rmtract is properly iHt.iH««l. tli«5 ratiHcati<.ii is 
thiown brtt-k to tho tini«i wluMi th« art w** done, .so that 
it cati be effectively made after repudiation f)y the 
jiromisor (p). Moreover, the ratification nnist be not 
of part of the contract but of the whole (7). 

It may be added that where an a-^ent rnakci a 
contract in the name of his principal, but with the 



.kin<^ the benefit of the eon- 
tract f(tr himself, the principal may nevertheless ratify 
and enforce the contract as against the other parties to 
it (r). On the other hand, if an agent contracts in the 
name «)f a piincipal and the contract is within the 
ttnriis of a written authority given to the agetit by 
th(! principal, then although the agent makes such 
contract solely in his own interests and the written 
iUitliority is not disclosed to the contractee, the latter, 
acting in good faith, will be entitled to hold the [>rincipal 
bound {n). 

Termination ok Agency. 

This tuay occur either by the act of the parties them- 
selves or by operation of law. 

(i) Bi/ Act of (he Parties. -This is styled reiucation 
if the principal withdraws, renunciation if the agent 
throws up the contract. It is brought about by either 
l»arty, and unless repugnant to the original terms of the 
contract, it may take place at any time. But it must 

(<■) Ih l'i>ilu( ((lu.^oliUal'il Ctpiia Muu.^ (ISltO), 4.'j I'll. 1>. 1»». 

(/>) liollni, I'ltrlmm v. Lmiihirl i . ;S!»), 41 CIl. I). L-'Ufi. 

(7) (■/. FenjiKs^o)! \ r.iniiiijtiin (l»2'.t), !» B. & ('. W. 

I)) /{< Tirdtmiiini uml l.rilinn'iiiii t'rcie.--, |l8yil) 1* Q. B. l»ti. 

i.) Hanibru v. Buntand, [ItHM] -' K. B. 10. 



Im! HnU'xi thiit lilt! )iriii(i|»iil will Im; liiilil)- mi nmtiiutH 
entered into on his bdmll niter I Ik; t(>iiiiiiiiiti<>ii of tlio 
u,t(<tiiry. unless he. Ims <'uu «'il tiotico of siuli Itumiimtioii 
to reach third piiitiivs. wiio iikiv net on the faith of the 
[Mevioiis aiitlioritv. until such ii time has ela|»setl, or 
such circunistances have happened, as would lead u 
reasonable man to infer that the a;:ent's iiutlioritv 
had been counternianded. Thus, a servant who had 
authoritv to receive, borrow, and pay money for his 
nirtste.r. borrowed 2<M( 'guineas in his master's name 
after he had quitted the survice ; and tlie lender 
recovered a;'ainst the master on the ;^round that lie had 
not been made nware of the revocation of authoritv (/)• 
So. in the case of n partnership (wliicli is in main 
respects a kind of a^'iiicy). the partner wlio leaves th<<. 
lirm but remains ostensibly a member, is liable for 
d(!bts incurretl after his retirement. 

.V limit to this power of revocation at any time, is 
found where an " intcrrst has been coupled with tlic 
authority '' ; c.;/.. when the principal has entered into 
an aiireement to "-ive .something.' to a person, and lias 
appointed the latter as au,ent to collect and .secure it 
for him.self. In sucli a case the authority cannot be 
revoked. So. althou-jh the authority of a factor to sell 
Hoods is in jfeneial revocable,, it will become irrevocable 
if he has made advances to his principal in consideration 
of the latter nivin-,' him autliorit.y to .sell at the market 
price and rtftain his advanci's out of the proceeds (n). 

(ii) By Operation of Lun: (I) Subject to exceptions 
depending upon the special terms (.f the appointment, 

(/) MoiiL V. Cliii/lnii. .\|.illi)\. |)f .Jiiif .Maiitiiud, Ijk. J, i-. |o. 

('() liakiijlt V. Alkinioit { ls»(>). i, M. »t W. ti7u. 



tli«! di'utli t)|' thu principal at onru piitH an viu\ to tlio 
iuitlmrity of liis iij^ent. A cawo illuHtmtinj,' tiuH is 
Sfiiout V. ///wry (j), in which it was dncidtHl that a 
InitchcM' was unahhi to recover from the husband'H entato 
the price of meat supplied to a woman, at a time when 
lier husband, supposed to he alive, was in rejility dead ; 
her authority to l»uy was ^(»ne. (2) Bankruptcy : The 
a<;eut's authority is <,'enemlly r(n()ke<l l»y the bank- 
ruptcy of his principal ; not nei cssarily by that ol 
himself, (.i) In.sanity : The insanity (»f the a},'ent will 
ileterniine his authority, and the insanity of the princii)al 
seems e<]uivalent to a revocation, but if third piirti<'s 
have dealt with tlie aj^<Mit on the faith of the authority 
previously jiivon, and without notice of its determina- 
tion (»r revocation, the princi[)al will be preclude<l from 
denyin;.' the continuance of the anthority. Thus, in 
Drrir v. A'an/t (y), a man ^^ave his wife authority to 
buy, then became a lunatic. When he had recovered, 
he repudiated her contracts, but was held liable in an 
action for the pric(!. 

.V contract of a;^ency involving personal services is 
ilisaolved and not merely suspended If the aj^eat is com- 
pelled to join the army, because he cannot then lawfully 
fulfil any of his duties and the principal cannot lawfully 
accept any of his services (:). 

In aihlition to the above. tli»! a^en<'y may be termi- 
nated by — (i) expiration of the time aj^rjed up(m for 
its continuam-e ; (ii) (lestnu'ti(m of the subject-matter ; 

(.r) (IS42), U» M. .<i \V. I. In sc far as this oas<> «l<'iiclc.| that the 
,ii:«'iit wi)ul<l not hi! liuhli! in .such circunistiun-f.s (dr dainaKCH for 
lii-cuch of warrant > of iiuthoritv, it bo trealt'<l as ovorruled. 

Sic juist, |). 1 H). 

('/) (l.><7!)), 4 Q. !?. I), (itil. 

t:) Mamhdll v. h'lanii::, [l'J17] 2 K. B. 87. 






III 2.8 





III 2.2 

II 2.0 



cM.',t<.t. Ne» ro'k ■■4609 t,"iA 
f ■ -8.: - 0300 - Phone 
'■' ^'88 - 5989 - Fa. 



« I 

t'.//., <Im! iiMi|»loymcril of an M-ont to let a. Ikhin,; is dcti'.i- 
niiricd wlioti tlio lioiiso, is Ituiiit, dow,,. Tlio cinpldynmiit 
<»l an aumit. for a tixotl torni (irxis not n«'rcssaiil\- imply 
that a hnsinoss sliall he continued so as to uivo liiin an 
opportunity to earn commission, and the sale of the 
husinoss hefore the term expires niav. in elTect. deter- 
mine the auoncv without renderin- tin' princij)al lialde 
to make any conii»ensation to th(! a^ent (n) ; (iii) com- 
plete performance ; e./y., when an a-^ent to procuri; a 
huyer has procured one who is acce ted. 


Rights and Dutiks. 
(i) As Between Principal and Agent. 

DuUes of KH A(/eiit fo his Prinripnl. --Hi>^ duts is to 
ilo the woik he has undertaken, and lo da it with 
reasonable skill and diligence. The exa< t amount of 
skill and care reipiired vaiies much with the circum- 
stances, but "generally a, man who undeitakes to act for 
another must not show less dili^enc(^ than he would 
have shown if exercising his own atVairs. If in addition, 
he is engaged upon an understanding tliat he must show 
special skill, this skill he must show, (u- he is liable to 
indcnmify his i)rinci{>al, even though he has done his 

In this respect a difference is to be observed between 
a gratuitous and a paid agent ; the ^latuitous agent is 
liable oidy in the event of neglij>etice in carrying out a 
matter actually commenced, but he is not bound to 

('/) fScC l\lln,l,^ V. /■■"//(■r...r/ ( |S7t,), | .\]t|l. < '.I , J.lll; l/. f ,1 nii I V. 

(iiilil.<m.)lh, I IS'.M I I 1^. n. .".t4. It i> a .|iK-ti(iii of llir of 
the coiitriift ill Ciuli < ,isi\ hii iiii|ioi|;imI ilcmciiL licitij; tlm iiatiiro of 
tlif» I'on-idfM-.iifion iiii.vji);; Im flu- [, I,, ,„,-,.,•. See >>■/■!,„.;, Lnii'fid v 
.V. UoiK I I'.t04! 2 K. H. 4lt> ; athnmd, | I'.KIol A. C. JU'.t. 

RkiHTS WD DlTlI'.S. 


filter upon tlie ajj.encv at. all. He is not liahlo for a 
//o//-tea.same, hut, t)nly for a wr/.s-teasance. Whatever 
he does enter upon, he must carry it out without neyli- 
!j,ence, it beiiiii held that the eontideuce induced by 
lUideitakinL; any service for another . is a sufficient leyal 
consideration to creat*; a duty in the performance of 
it (b). The giving; of j;ratuitr-is advice seems to 
stand on the same footing (c). Even then, however, 
his responsibility is not so great as that of a paid agent, 
for whereas the latter is liable for ordinary negligence, 
the v(jluntary agent is liable in damages only if he be 
'guilty of gross Uogligence {d), unless, indeed, his pio- 
fession is such as to imply skill, in which case, if he entei' 
upon the work at all, he must do so with that skill (r). 
The (piestion then arises, what is gross negligence ? 
(^ROMi'TOV, J., laid down the law in Beat v. South DeA'on 
Nail. Co.(f), thus: " (Jross negligence includes the 
want of that reasonable care, skill, and expedition, 
which may properly be expected from persons so holding 
tlicruselves out (i.e., as agent for anything), (»r their 
sfi vunts. . . . The failure to «ixercise reasonable care, 
skill, and diligence, is gross negligence. What is 
reasonable varies in the case of a gratuitous bailee, and 
that of a bailee for hire. Kroni the former is rt^asonablv 
expected such cart; and diligence as persons oidinariK 
use in their own alVairs, aiul siuh skill as he has. Fioni 
the lattei' is reasonably expected care and diligence such 

{!>) Sw Cinji/.s V. ii<ni,i,.l (1704), I .Sill. I.. ('. (I2tli c.l.) I!tl,aii,l 
notes llicifto. 

(<;) liinilmiil V. /.'((»/.• iij Moiihnil, ||!I|S] A. ('. IC'Ci, iit pp. (i'lT. 

t;s<t, (iitU. 
(it) Hiimcliiiinii V. I'otrlii/ (IHIU), I .Moo. \, K. :tH : lh>ormaii v. 

.Uiikiii.t{\i>,:\t>), 2 A. &. K. '2r,n. 

if) l<onl I,ou(iii«iiK()C(iH. in SIdtllM \. HhukLiiiiii- (I7SM). I 
M. Bl. ir.,s. 
(/■) (isin), :{ H. & (' pp :t4l,:«42. 





ns aro oxncisod in tl.o onlinniy .-.ihI |.i„pcr miirso of 
Miiiilixr l.nsiness. nnd .s,id, skill ;,s hv „u^l,t f„ l,avo. 
VIZ., fl„. skill usual and r«|uisit.' in tho. Imimh.'ss fur 
wliicli Ih> ri'ct'ivos pax iiit'iit " (y). 

Wliiit.'vcr the aui'ut. does niusi, |„> done for \[u- h.-nolif 
of his piinripal, not nocessarily in luinu; ; in fact, 
not. ordinarily so. Thus, an au.^lion.vr s(>lls without at 
«'iiro(lis.losiu- tho vondor; a hiokcr s<-lLs -for my 
|)rinci|)al."' or. to use a nior.. houK'ly rxainph'. the 
sf-rvant cidls and on^a-.-s a calunan. •nid all wifliout 
nuMitionin- the namo. of th.« j).-rson ;„r whom the con- 
tract is made; hut in each all henefit helou-s to 
tlift principal. An a;,'cnt cannot convert himself into a 
principal without his principaks assent ; e.f/., if a bioki^r 
is .'mploved to buy. he camiot sell his own -cods to the 
principal without the principal's assent; and even a 
trade usaue will not excuse this, unless the is 
acp.amted with the usa.ue {h). An a.uent .nust never 
place himself in such a. p.-sitioii as to cause his duty 
and his int.M'est to contli-t. It is for this reason that, 
he mus< not act f.u- the advancciuent of his ,)ersonal 
inter.ists in the particular matter without leave, uor 
turn himself into a principal (/). Ue must not inter- 
nnx his afiairs with those of the prim-ipal. e.f/., he should 
not pay money received as agent into his own private 
a.coniit {k) ; he must always he prepared to render an 
account (/). 


i \ 

(7) ( ,„-l,.,.,ur ■ |,as, however. .le.enbe.l as t|,e siine 
thing a.s ne.h.uence, the a.l,lition .,f a ep ih ' T e 

,.om „. hear .„ ,,u,Kl ,s that what a.n,.,.„,.s .o^u.,.,.naL .''i,,.', ee 

... one case d.-es mu neeessanly eoast.tute a in another. ^ 

(A) IxiJjiiisuii \. MiAlrtI [\s~,:,). L K 7 H I sm-> v , - ■- 

(/,) Morv, Auenev. ». 2(.'H. 

[I) W'hii, V, l.i,ici,lii (Iso:;). s \',.s, ;!(•,;! 





An auont inuHt not. inako any socret profit out of liis 
•'inployiiitMjt, aJid any so nuidc will htuonie the property 
of his employer. Thus in Morison v. llionipson (m), T., 
a Ijrokcr. was einployed to j)iir(hase a sliij) ; the vendor 
einj)loye(l S. as his agent and aureed t.o j^ive 8. what- 
ever was obtai)ied over £S,ri(Ml. S. aj^reed to give a 
portion of this excess to T., and eventually T. bought 
the vessel for .t!).-J")(». It was held that T.'s principp-1 
couhi claiin whatever T. had obtained from S. So in 
Kimhcr V. Harhcr (n). the ])laintitY desired to procure 
shai-es. and defendant auree,d to buy some for him at a 
priei' ; as a fact defendant had already bought some for 
less and lu^ sold these, to the plaintiff, and the Lord 
("iiANCKM.OH held that tUM'endant was an agent and 
iinist hand over the difference between the bought and 
sold price. Iiv Ildrrinyton v. Victoria Dock Grnving 
Co. ((*), defendants agreed to give jdaintitt" commission 
lor superintending repairs to be executed on property 
of the Great Eastern Railway Company, plaintiff' being 
at till! time agent to the railway company. Plaintiff 
was to use his iniluence to get the defendants the work. 
It was deciiled that though the commission did not bias 
the plaintiff, yet the promise to give it was corrupt and 
tlie plaintiff' was not allowed to recover. This case is 
important as showing that the effect of the illicit com- 
mission on the agent's mind is not to be considered, the 
mere agreement to accept it is sufficient, and if the 
money is paid over, it may be lecovered by the principal 
as money received to his 

.V sub-agent who is aware that he is being employed 
li\- an agent of the principal stands in a fiduciary 

Im) (lS,4K L. k. !) g. B. 480. (n) (1873), F.. K. 8 Cli. .".li. 

(") (IS7H), ;{ g.iM. I). ,>i«i, 




rolat.onsh.p fo 11,0 ,.,inripal. ami will 1.,^ afT..untuhlo to 
liim f(M urn- .sHciot (oi.nnissiun rweiv.',! ; nitliuimli no 
pMvitv ol contract lias l.efii ^stabli.hf>(l betwoen the 
siib-a.ient and th.- principal (p). 

But tlio principle proliihitini; an a-ont from niakini^ 
ii pn-tit tor hi.nscit l.cvond his a-roe.l renumeration 
<l<'«'s not apply to tho directors and ofticors ol a cor. 
poration. uhifh has boon appointed anient, and then 
employs its oflicials to do work in connection with the 
auency for salaries, commission and profit costs. The 
directors and ollicors stand in a fiduciarv position onlv 
to tlie .-ompany and jiot to stran-ers dealing,' with the 
<'<»nipauy. and payments maile to them hv the 
rompany will he allowed {(/). 

Ati ajent who fakes a secret from a 
person with whom he is dealin- on behalf of his principal 
IS a debtor to his [)rincipal for the am(.unt thus received ; 
iMit the principal cannot claim that the a^ent is trustee 
lor him of the actual money, and so cannot follow the 
'Mon.'v into and chiim the investment in which the ai-ent 
has placed it ; the priiicipars nMuedy is to brin^ an 
action and oet judgment for an am..iint ecpn'valent to 
that received by the ai^ent (r). 

An a-ent who receives a secret, profit must not onlv 
ac-oiitit b)r it U> his principal, but also forfeits his ri-l.t 
to commissi*.!! in r.-spect of the transaction in c.nirec- 
tion with which the corrupt bar-ain was made (a). 
But where tht^ transactions between a, principal and 
his a.irent are severable, and the a-ent has acted honestly 

w!m"\:u "' ''""" ■'""" ''■ ^'"- ' '"*'''' ' ^ ^^- ' '■ '^•■'' "''^" 'l">< 

((/) /iaik V. Slaiulanl Land ('„., Li mil, d. | l<)l I | I Cli (;|s 

(/) Li'ld- V. iSlubb.-: (\H<\H), 4.-, t]i, | >. | 

(.-) Ainliau:^ v. Hamwi/ dCo.. | l<,K»3| 2 K. U. li,'!,-.. 

IvlOiHTci AM» iJUTIliS, 



m hOMK! and disli(mct>tly iu otJiers, lie is entitled to 
cumiiiissiim iu all the iu.stun«e.s in which he has iieen 
hojie«t, but is not entitled to it iu the cases in which 
he has been dishonest (/). A seciet profit received by 
an agent without fraud iu connection with some duty 
incidental to the uiain purpose of his eiuploynicnt 
< aiuiot be retained, but in such case the agent will not 
lorteit his right to remuneration (m). An agent who 
leceives a bribe from a third party may be dismissed 
witlunit notice (x). Corrupt transactions with an agent 
are now punishable as misdemeanors, both the agent and 
any person corruptly dealing with him being criminally 
l(^sponsible (y). 

The fact that the principal has recovered from his 
agent a bribe received, will not of itself prevent him 
from proceeding for damages against the person who 
paid the bribe (2). And further, where a contract has 
been entered into with an agent who has been induced 
to accept a bribe, the principal may refuse to be bound 
by the contract, irrespective of any eli'ect the bribe 
may have had on the agent's mind (a). 

A further duty of the agent is to do the work him- 
self, and not to commit it to others for performance, for 
the old maxim applies^ — Delegatus non potest delegare. 
" One who has authority to do an act for another must 
execute it himself, and cannot transfer it to another " (6). 
But this needs some modification, for though it applies 

(/) Mkdah Tauiddkkjahrik v. BrutiUr, [1900] 2 C'h. 071. 
(u) Ilippisky V. Knee Bros., [l'.)05j 1 K. B. 1. 
(x) Boston Deep Sea, etc. Co. v. Atiselt (I88S), 39 Ch. D. 339. 
iy) Prevention of Corruption Act, 190G. 

(j) Mayor of Salf Old v. Lever, [1891] 1 Q. B. 108; Grant v. Gold, 
etc. Syndicate, Limited, flUOO] 1 Q. B. 233. 

(a) Shipway v. Brondu-ood, [1&99] i Q. B. 309. 

(b) Bacons Abr., Auth. D. ; Story, Agency, s. 14. 

M.I.. F 



i I 

where personal trust is put iu the anent, ui wlioie 
peisoual .skill is io(pured. ret in many cases it does not, 
especially uiuler these circumstances, (i) where custom 
sanctions delegation ; (li) where delegation is necessary 
to proper pcilormance ; (iii) where there is an agree- 
ineiiL, express <.r implied, to allow it. The leading'case 
on this part ol the subject is De Bussche v. Alt (e) 
riiere, a plaintill" (resideiit in En,i;land) consigned a 
ship to G. & Co., in China, f(,r sale on certain terms, 
and G. & Co., with the knowledge of the plaintiff, 
employed tlze defendant in Japan to sell it. A point 
arose m the actioii wliether or not the delegation was 
good, and Thesiger, L.J., in giving the judgment of 
the court, said : The maxim {delegatm non potest 
cielcyare), '"when analysed, merely imports that an 
agent cannot, with.,ut authority from his principal, 
deyolye upon another obligations to the principal which 
he ha.^ himseli undertaken to personally fulfil ; and 
that masinuch as confidence in the particular person 
employed is at the root of the contract of agency, such 
un autnonty cannot be implied as an ordinary incident 
in the contract. But the exigencies of business do 
rom time to tune render necessary the carrying out of 
ne instructions of a principal by a person 'other than 
the agent originally instructed for the purpose, and 
where that ,s the case, the reason of tlie thing reuuires 
that the rule should be relaxed, so as, on the one hand 
to enable the agent to appoint what has been termed a 
sub-agent ... and «m the other hand, to constitute 
m the interests and for the protection of the principal, 
a direct priyity of contract between himself and sucli 
substitute. And we are of opinion that an authority to 
(c) (1878), 8 Ch. D. 280. 

Rights and DiniES. 


I > 

tlie effect refened to may and should be implied, where 
horn the conduct of the parties to the ori<,anal contract 
of agency, the usa^'c of trade, or the nature of the 
particular business which is the subject of the agency, 
it -nay reasonably be presumed tliat the parties to the 
contract of agency originally intended that such 
authority should exist, or where in the course of the 
employment unforeseen emergencies arise which impose 
upon the agent the necessity of employing a substitute." 
Thus, an auctioneer must do the work himself, but if 
goods are given for sale at a public auction to a man 
known not to be a licensed auctioneer, there is authority 
for the agent to employ a licensed .nan. So, if a man 
employ a solicitor, there is implied authority to allow a 
delegation of some of the work to clerks {d). 

An. agent may not employ, save in his principal's 
interest, materials and information which the agent has 
obtained or been supphed with only for his principal 
and in the course of his agency (e). 

A del credere agent is an agent for sale who undertakes 
to pay if the buyer becomes insolvent and (it seems) if 
for any other reason the buyer makes default in payment 
of an ascertained sum ; but such an agent does not 
guarantee the due performance of the cimtract in the 
sense that the seller may sue him in respect of disputes 
arising under it. Such disputes must be fought out 
between the principals, the agent only guaranteeing 
that the buyer will prove solvent (/ ). 

[d) As to delegation by directors, see Howard's Caw (iSliO), L. K. 
1 Ch. 661; and generally, Valliii v. Bell (1815), 4 Camp 1S3 ■ 
Coks V. Trecothick (1804), 9 Ves. 234, 251 ; and Story on Agency, 
as. 14 et aeq. A3 to liability for sub-agents' contracts, etc., see Story! 

(e) Lamb v. Kvana, 11893J 1 Ch. 210; and see Robh v Grten 
[1895] 2 Q. B. 315. 

( / ) Gabriel J: 6o«,« v. Vhurchill and Sim, ( 1914] 3 K. B. 1272. 



The del irederc uy«Mit will he liublc thoiif;h llio uiianjic- 
iii«nt 1ms u»»t been leduied to, or tnidenciid by, writiu^, 
tor liis promise to indemnify is not ii <iiiarantee within 
the .Stiitutc of Frauds, s. 4 {//). 

The possession of an a^ent is the possession of his 
principal, und ac(t)rdin<'ly he cannot set up the Statute 
of Limitations (A) a<,'ainst his principal ; but if he 
repudiates the character of a^eut and claims property 
in his own ri«.!,ht, the statute will commence to run iit 
his favour (t). 

Rights oj (iH Atjent an (ujainal his I'rincipul. 1. in 
the first place, he has a right to the remuneration agreed 
upon, or if none has been fixed, then in cases where a 
I'ontract to pay for his services is to be implied from the 
circumstances, the agent is entitled to be paid what 
is usual and customary in the business in which he has 
been employed or, in the absence of custom or usage, 
to a reasonable remuneration. If the principal does 
not carry out the contract made for him, the agent 
nevertheless will often be entitled to his commission. 
Thus, in Prichett v. Badger (k). an agent found a pur- 
chaser, but the principal would not complete ; it was 
decided that the agent was entitled to reasonable 
renmneration, Willes, J., thinking the full amount of 
agreed commission to be due. In Grctn v. Lucas {I), 
and in Simpson v. Lamb {m), the same principle was 
adopted. In the latter case the principal sold the 

'7) See SuUon v. Grey, [18941 1 Q- B. 285 ; tind posl, p. 45«. 
(h) Ante, pjj. 8;j ei xeq. 

(i) WilUanm v. Pott (1871). L. R. 12 Eq. 149; Lyell v. Katuedij 
(1889), 14 App. Ca.s. 437. 
(k) (1857), 1 (.!. B. (K.s.)2ytJ. 
(i) (l87o), 33 L. T. (N.s.) 584. 
(m) (1855), 17 C. B. G03. 

RimiTs AND Duties. 


property himself, and the court decide. 1 tliat, though no 
action could bo brou<fht for revocation of authority, yet 
the agent could recover for work already done. But 
each case .stands by itself ; sometimes the facts show 
that, accordint^ to the a^'reement. the agent is to take 
nothing unless he completes the matter ; sometimes he 
is to take a full commission in any event ; sometimes 
he may get an amount proportionate to the work done ; 
sometimes his rights are regulated by custom or usage (n). 
A fruitful source of litigation arise.s from any doubt 
whether the agent is entitled only in respect of the 
first transaction arising from his introduction, or whether 
he can demand commission on all subsequent orders 
from the persons introduced, and no general rule can 
be laid down ; the parties should see that the precise 
terms are in the agreement (o). 

2. An agent is entitled to be indemnified for losses 
and liabilities incurred by him in the course of the 
agency. Thus, in one case, where the agent was sued 
for seizing goods improperly, and it was shown that he 
did it bona fide, and at the command of his principal, 
he was adjudged to be entitled to indemnity (p). So if 
a principal direct his agent to engage in any enterprise 
in which, by any particular custom or usage of the 
market, liabilities are incurred, the agent will be entitled 
to be indemnified against these, unless the custom is 
inconsistent with the contract. " It is familiar law that 
a principal who employs an agent to purchase goods for 

(»») See Queen of Spain v. Parr (1870), 39 L. J. Ch. 73 ; Green v. 
Mules (1801), 30 L. J. C. P. 343 ; Lochoood v Lcvick (1860), 8 C. B. 
(N.s.) 603 ; Tribe v. Taylor (1876), 1 C. P. D. 505. 

(o) See Trihc v. Taylor, supra. 

(p) Toplia V. Crane (1838), 5 Bing. N. C. 03(1; Belts v. Qibbins 
(18.'J4), 2 A. &E. 57. 




liirii ill ;i )»Hiti(nliir timrkct is to bo taken to bo coiinizant 
(it and is bound by tho rules wbidi ronulut)' doaliiiLrH 
tlicroin ; and tlio d'semt is ontith^l <o })o indorniiiliod by 
liis principal for all li« dooH in accordance with tlicme 

rulos ■' {(/) (WiLLKS. .1.). 

To thin last proposition limits liavo to bo plaood. 
(i) If tho losy lio cuiisod by detault of the auont himself, 
his riyht disappears (r) ; (ii) tho cnstom must be one 
tliat is woll known ; so notorious in tho market that 
tliose doalin'4 there mav oasilv ascertain it. and mav 
well be supposed to have knowledge of it (») ; (iii) tho 
custom must be le^al and roasoiuiblo, or else e::press 
knowlodue of tlie custom should bo shown to exist (t). 
Some recent cases will illustrate these rules. A stock- 
broker who has wrongfully sold shares as a^^ainst Ids 
principal cannot claim from him by way of indemnity 
even such proj)orti(m of the loss as would have been 
payable if the contract had been duly carried out (w). 

In Pern/ v. Barnctt (x) an action for losses sustained 
(»n defendant's account was brouj,'ht ; the defendant 
had instructed his agent to purchase bank shares, 
and before settlinj,' day repudiated the contract. The 
broker had to pay, and now asked to be recouj)ed. It 
was admitted that the purcliase was void, as not beinjf 
in accordance with Leeman's Act (//), but a custom of 
disrej^arding this statute wat. showTi to exist. The 


(7) Whil'hmd V. Izo'liimn), L. R. 2 C. P. 228. 

(r) DutuMn v. Uill (1S73), L. R. 8 Ex. 242 ; A'«m v. Pond, [18981 
1 Q. H. 42ti. 

(s) GrisHdl V. Riisloice (1868), L. R. ,3 C. P. 112. 

(0 NeiUon v. James (1882), 9 Q. B. D. 546; Perry v. Barnett 
(188.5), 14 Q. B. D. 407 ; 1-5 Q. B. J). 388 ; Scyrnour v. Bridge (1885), 
14 Q. B. D. 4f>0. 

In) Ellix V. Pond. [18981 1 Q. B. 426. 

(X) (1885). 14 Q. B. D. 467 : 15 Q. B. D. 388. 

(f/) See ante, p. :50. 



rourt lu'Ki. (Ill ji rindini^ tlint t]u\ dcft'ntlfvnt wa^ ii(»t 
iK'<niaint<'(l with this ciistoin. that tht; plrtiiitiU miiM 
tint, iccuvfT. fi.r a l<iiit\vl(!(lu(' of mi iinrmisnniil»l«t und 
illt'ual nistorii will imt })« picsimicd. In Sci/iiiour v. 
Iiri(hff (:). the liuts were, siiiiiliir, hut knowlcilv'r of 
thft custom WHS assuiticd or piovod, and tim dfcihion 
was aiiainst th«' ddfrtulant. 

Thfi last riu()t(>d caso is somewhat similar to thoso 
in which it has hccii held that when a person at tht; 
rorpiest of another incurs some liability, which, thoiiiih 
not legally enforceable, is paid in consefpionco of some 
moral pressure {e.ff., dan^,'or of expulsion from a society), 
the principal may be l»^ally liable to indenmify liis 
agent. In licnd v. Anderson (<»), an aj,'cnt was employed 
to make a bet ; the horse lost, and the aj^^ent [)aid ; had 
lie not done so, ho would have been powted as a de- 
faulter ; it was decided that he could recover from his 
principal tlie amount paid (6). The line between this 
class of case and that iepresent(«d by Vernj v. Barnett (c) 
is rather fine; Matiikw, J., thou;,dit in Seipmiir v. 
Bridge (z) tliat Read v. Anderson (a) coveied the case 
before him exactly. 

3. An ajfent has a ri<,'ht to a lien, the particular kind 
varying,' with the class of agent. See the chapter on 

" LiKNS " (d). 

1. In some cases an agent has a right to stop g.iods 
'■ in transitu "' (e), as when, being apcnt of the con- 
signee, he has made himself liabh; for the price by 

(z) (1885), 14 Q. B. D. 400. 

{a) (1884), 13 y. B. D. 779. 

(6) This case mus decidetl before the passing of tlie Gaming Act, 
1 802 ; though the principle of the decision is still good law, that 
Act W'juld, in thi.s partioufar o.osn, h.avf nrncitrpd an .-opposite re-iult 

(c) (1885), 14 Q. B. D. 470 ; 1.5 Q. B. D. 388. 

('/) FoH, pp. 480, 487. (i) po-l, pp. 277 tt .^eq. 



i ' 


■i i 

having pledged his own Cicdit (/). This rifiht may not 
be exercised if the general balance between the principal 
and agent is in favour of the former. 

Authority of an Agent. — This part of the subject is 
much mixed up with that which treats of the liabilities 
incurred by an at,'ent towards third parties, and of tlie 
extent to whi( a a principal is bound by an agent's acts ; 
and much of the present subject may be left till we 
come to a consideration of such questions. The 
authority of an agent is said to be general or special, 
dependent upon whether the agency is general or of a 
special class (g). In every case it depends, as between 
principal atid agent,, upon the terms of their agreei;x„nt, 
and here the authority will be strictly construed (h) ; 
as between a^ent, principal, and third parties, upon what 
is the ostensible authority given to the agent A 
secret limitation of the authority is no answer to the 
claims of those who are not aware of any limitation — 
thus, A. has a shop of which B. is manager, and B. is 
in the habit of buying goods on credit ; one day A. tells 
B. that for the future all things must be paid for at 
once, and in cash, and he withdraws B.'s authority to 
bind him ; a creditor who subsequently supplies goods 
on credit of the kind B. is accustomed to take can 
recover against A., unless this limitation of B.'s authority 
has been communicated to him ; and this is so even 
though when he supplied the goods he did not know that 
B. was an agent (i). So, a principal who entrusts title 

(/) Ilawkej^ V. Dunn (1830). 1 C. & J. .'ilft. 
(f/) Seean/r, pp. 117, IIH. 

(//) E.g., if A. and B. have authority to do a certain act, A. cannot 
do it alone (Com. Dig. Atty. ('. (!1)). " 

(/) Wiittenu V. Fenwick,\\m'^] 1 Q. B. :!40. 

6 1 

Authority of Agent. 


deeds to an agent for the purpose of borrowing a limited 
sum of money, will, as a condition of recovering the 
deeds, be liable to repay the whole amount, though the 
agent exceeds the limit, if the excess was advanced in 
ignorance of the limitation : and he will be so liable 
although the lender (acting in good faith) did not know 
that the agent had authority to borrow at all, and 
made no inquiry (i). If the agent's authority is known 
to be special, the third party must make himself ac- 
quainted with its limit, unless the principal leads him 
to infer reasonably that the authority is of a particular 
nature and extent (l). 

Certain classes of agents have a certain and definite 
authority : such as brokers, factors, auctioneers, etc. ; 
as to these, see post, pp. 153 et seq. But, generally, it 
may be said that whatever authority is necessarily 
required to carry out the purpose for which the agency 
is created will, in the absence of evidence to the con- 
trary, be implied. Within the limits of his authority, 
an agent has such powers as are required for its proper 
exercise. Authorities " are to be construed as to in- 
clude all the necessary means of executing them with 
effect. Thus, an authority to receive and recover debts 
includes a power of arrest " (m). So also, a man put 
in charge of a shop will have implied authority to order 
goods for the purposes of the trade carried on ; and to 
receive payments from customers, and give receipts. 
Such implied authority, however, must be so construed 

{k) Brockleshy v. Temperance Building Society, [1895J A C 173 
(I) Story. Agency, ss. 57 et seq., s. 126. As to procuration siena- 

tures on bills of exchange, see -post, p. 313. 
(m) Ilounrd v. Baillie (17!)fi), 2 H. BI. 618. This, of course was 

stated with reference to the powers of arrest then available to 

creditors ; but the principle remains good. 

F 2 



as not tt» give a different kind of power from that 
involved in the original direct authority ; e.g., if an 
estate agent be employed to procure a purchaser for an 
estate, and to advertise it, he may not actually enter 
into the contract of sale (w) ; but an authority to sell 
confers an authority to make a binding contract, in- 
cluding an authority to sign an agreement (o). So an 
agent appointed to receive payment of a debt must take 
cash only, unless it is in accordance with the ordinary 
course of the business to take a cheque (p) ; and he 
may not write off the debt against one due to himself ; 
unless authorised by a custom of which the principal 
has notice (q). 

The following examples are worthy of notice. Goods 
were delivered to an agent for sale at a certain place, 
and he was unable to sell them there ; it was decided 
that he had no authority to send them elsewhere in 
search of a market (r). Authority to settle losses on 
a policy includes a right to refer the matter to arbitra- 
tion (*•)• A principal gave an agent abroad authority 
to purchase 100 bales of cotton, and the agent purchased 
94 only, this being all that was practicable ; it was 
held that the agent had authority to use hia discretion 
according to the state of the market (t). At a meetinf^. 
at which defendant presided, a resolution was carried 
that a circular should be " printed and advertised at 

(«) Chwburn v. Moore (1892), 61 L. J. Ch. G74. 

(0) Rosnihiiiim v. Bihon, [lOOtt] 2 Ch. 207. 
Ip) lirid(jf/i V. Garntt (1870), L. K. 5 C. P. 451 ; 

[18<)4] I Q. B 272. 

(V) Scvtl V. Irviruj (1830), I B. & Ad. 005; ^ „., 

7 C. B. (N s.) 440 ; Piarnon v. 6co« ('878), 9 Ch. 1). 19s 

(r) Vatlm v. £f« (1815), 4 Cauip. 183. 

(s) (Joodsov V. Brooke (1815), 4 Camp. 103. 

(1) Johnston v. Kershair (lht>7). L. R. 2 Ex. 8! 

; rape v. Wetstacotl, 
Hirulinij V. Pfdrcc, 

Authority of Agent. 


the discretion of W." as quickly as possible ; W. em- 
ployed a printer, and the circulars were sent to the 
defendant, who accepted them ; there was an arrange- 
ment whereby W. was to pay, but this was not cora- 
mimicatod to the printer, consequently the defendant 
was held to have authorised W. to act on his behalf, and 
was declared liable accordingly (w). An authority to 
" sign for me and in my name . . . any and every 
contract . . . and from time to time to negotiate, 
make sale, dispose of, assign, and transfer,'' certain 
notes, was held to authorise sale, but not pledge (x). 
Counsel has general authority to bind his client in all 
matters within the scope of the action, but not in 
matters which are collateral to it (y). But the ordinary 
doctrines of agency do not always apply to the acts of 
counsel. Thus, if counsel agrees to an arrangement in 
excess of an express authority conferred on him by his 
client, then, although the limit put upon his authority 
is not known to the other side, the court will not neces- 
sarily give effect to that arrangement ; this apparent 
exception seems to arise from the fact that the inter- 
vention of the court is necessary to make the arrangement 
binding (z). 

As to Stock Exchange transactions, see post, 
pp. 525-529. 

If a principal gives authority to an agent in such 
uncertain terms as to be susceptible of two different 
meanings, and the agent bona' fide adopts one of them 
and- acts upon it, the principal cannot repudiate the 

(u) Rihy V. Packington (18()7), L. R. 2 C. P. 53tt. 

(x) Jovmeiijoi/ Coondoo v. Watson (1884), 9 App. Cas. 501. 

(y) Matthews v. Munster (1888), 20 Q. B. D. 141. 

(j) Neale v. Gordon Lennox, [lyu2J A. 0. 4()i"). 



i ! 


act, thouji;h lie meant the authority to be talcen in tlie 
other meaning («). 

Breach of Warranty of AtUhoriti/.— An agent who 
represents himself to have an authority from a principal 
which he really does not possess, or exceeding that which 
he docs possess, is liable to an action at the suit of third 
parties for breach of warranty of authority, provided the 
want of authority was not known to such parties (b). 
Nor is it different if the agent bona fide supposed 
himself to have authority (c) ; even though his original 
authority has ceased by reason of facts of which he has 
not knowledge or means of knowledge, e.g., by the death 
or lunacy of his principal, or in the case of a company 
by its dissolution (d). 

This doctrine is not limited to cases where the pro- 
fessing agent purports to contract on behalf of an alleged 
principal : any person who suffers damage by acting 
on the untrue assertion of authority may sue for breach 
of the implied warranty. Thus, in Starkey v. Bank of 
Englatvd (e), a broker, innocently acting under a forged 

(«) Ireland v. Livingston (1872), L. R. 5 H. L. 395 

(6) CoUen v. Wright (1856), 7 E. & B. 301 ; 8 E. & B. 647 • Fir- 
^>'^"'' ^ i'^^<'tors y. Ihrmphrey, (1887), 18 Q. B. D. 54 ; IJalbot v. 
Lens. [1901] Oh 344 ; cf. Sahrsm v. B(der\, Aktiebolaoet Nurds- 
tjeriian, [1896] A. V. 302. 

(c) PolhiU V. Waller (1832), 3 B. & Ad. 114. As to the measure 
of damacros, see Meek v. Wetidt (1888), 21 Q. B. U 126- and lie 
Sational Palace Coffee Co. (1883), 24 Ch. 1>. 367. 

(rf) Yoiirte V. Toynbee, [1910] 1 K. B. 215. 

(e) [1903] A. C. 114. Apart from agency, a person who presents 
a forged transfer for registration impliedly undertakes to indemnify 
the company or corporation against any loss resulting therefrom 
(Sheffield Corporation v. Barclay, [1905] A. C. 392). In Hank of 
EnylamI y.Cuthr,[mH] 2 K. B. 208, a broker who identified as the 
registered holder of certain stock a person who was fraudulently wt- 
.sonatmg such holder, was held liable to indemnify t!ie Kink for the 
consequent loss on the ground that hi? conduct amounted to a 

Kactoks Act, 1889. 


p(>vv(M- «»f attorney for the transfer of Consols, required 
the Bank of England in performance of their statutory 
duty to transfer the Consols in their books. Upon dis- 
covery of tlie forgery, the true owner of the Consols 
•ompelled the bank to make good the loss, and the bank 
was held entitled to indemnity from the broker. It will 
be observed that the bank made no contract of any 
kind, but simply performed a duty upon the faith of the 
alleged agency. 

Tlic Factors Act, 1889.— This Act codified several 
statutes relating to factors and mercantile agents, and 
it gives certain powers to agents in possession of goods 
or the documents of title relating to them. 

The Act applies mainly to " mercantile agents," and 
a mercantile agent means one " having in the customary 
course of his business as such agent authority either to 
sell goods, or to consign goods for the purpose of sale, 
or to buy goods, or to raise money on the security of 
goods " (/). 

The following are the chief provisions of the Act, so 
far as it applies to agents : 

" Where a mercantile agent is, with the consent of 
the owner (7), in possession {h) of goods or of the docu- 
ments of title to goods, any sale, pledge (»'), or other 

request to tlie bank to permit the entry and registration of the forged 

if) Section 1. 

(!7) Such consent is presumed, unless there be evidence to the 
contrary (s. 2 (4)). Fraud (not amounting to larceny by a trick) does 
not negative the existence of the owner's " consent " {Oppenheimer v. 
Frazcr aiid Wyalt, [1907] 2 K. B. 50). 

(A) I.e., when the goods or documents are in his actual custody, or 
in the custody of some other person subject to his control, or for him. 
or on his behalf (s. i (2)). 

(i) Including lien or giving security on the goods or documents 
(s. 1 (5)). 




I * 


(lisjtositiou of the snoods, made by him (k) when acting 
ill tlie ordinary course of business of a mercantile agent, 
shall, subject to the provisions of this Act, be as valid 
as if he were expressly authorised by the owner of th«^ 
goods to make the same ; provided that the person (?) 
taking under the disposition acts in good faith, and 
has not at the time of the disposition notice that the 
person making the disposition has not authority to 
make the same " (m). 

The general authority of a mercantile agent to pledge 
gt)ods cannot be restricted by the custom of any par- 
ticular trade (not known to the pledgee) which purports 
to deprive the mercantile agent of such authority (n). 

If the owner withdraws his consent, a disposition to 
any person acting in good faith will nevertheless remain 
good, provided such person has not at the time of the 
sale or disposition received notice of such withdrawal (o). 
The agent who, by reason of being or having been in 
possession of goods with the owner's consent, obtains 
possession of the documents of title to them, is deemed 
to hold these documents with the owner's consent {p). 

" A pledge of documents of title to goods shall be 
deemed to be a pledge of the goods " (7) ; but w^hen a 
mercantile agent pledges goods as security for a debt 
or liability due from the pledgor to the pledgee before 
the t'mo of the pledge, the pledgee can acquire no 

(<•) Or by liis clerk or other person authorLsed in the ordinary 
course (s. 0) 

(/) In tlic case of joint purchasers, the transaction will not be 
upheld unless they liave all acted in good faith {Uppcnheimer v. 
b'razer and Wyalt, aupru). 

(m) Section 2(1). 

(n) Oppcnhrimcr v. Atlenboroiigh <fc Son, [1908] 1 K. B. 221. 

(o) Section 2 (2). 

(p) Section 2 (3). 

(q) Section IJ. 

Factors Acr, 1889 


further right to the goods than coukl have be-jii enforced, 
by the pledgor at tlie time of the pledge (r). The 
consideration for a sale or pledge within this Act may 
be payment in cash, or the delivery or transfer of other 
goods, or of a document of title to goods, or of a 
negotiable security, or any other valuable consideration ; 
but when goods are pledged by a mercantile agent in 
consideration of the delivery of other goods or docu- 
ments of title to goods, or of a negotiable security, the 
pledgee acquires no interest in goods so pledged beyond 
the value of the goods or documents so delivered in 
exchange (s). 

The following section deals with the rights of con- 
Where the owner of goods has given pos- 


session of the goods to another person for the purpose 
of consignment or sale, or has shipped the goods in the 
name of another person, and the consignee of the goods 
has not had notice that such person is not the owner of 
the goods, the consignee shaH, in respect of advances 
made to or for the use of such person, have the same 
lien on the goods as if such person were the owner of 
the goods, and may transfer any such lien to another 
person " (t). 

" Document of title " includes, for the purposes of 
the Act, " any bill of lading, dock warrant, warehouse- 
keeper's certificate, and warrant or order for the delivery 
of goods, and any other document used in the ordinary 
course of business as proof of the possession or control 
of goods, or authorising or purporting to authorise, 
either by endorsement or by delivery, the possessor 
of the document to transfer or receive goods thereby 
represented " («). 

(/■) Section 4. (■■>) Section o. (0 Section 7. (u) Section 1 (l). 




M I 

The. Act prt'siMVfts the rijihts of thi; tnic owuer us 
hot ween himself and the a^ent, and iilso the common 
law powers of the agent (x). 

Several provisions of the Factors Act apply to a i.ass 
much wider than is included in tlie term " mercantile 
agents," e.g., the 8th, 9th. and 10th sections of the 
Act(y). Their general scope is such as to enable 
parties to deal freely in the market with tlu^se who 
apparently are possessed of the goods, or of the indicia 
of the property in them. 

(ii) Relations with Third Parties. 

Whether principal, or agent, or both, are liable on a 
given contract is a matter depending upon the intention 
of the parties and the authority of the agent, though 
it must be remembered that, as regards the rights of 
third parties, the apparent authority is often of more 
importance than the real. Generally, an agent is not 
liable on the contract, but a principal is ; but to this 
rule many exceptions are foimd, most of them depending 
upon this principle, that if by his conduct one person 
causes another to believe that a principal is being dealt 
with, he cannot put that other in a worse position by 
any subsequent disclosure of his character as agent"; 
e.g., A. owes B. money, and B. buys goods to the 
amount, supposing A. to be vendor ; A. cannot after- 
wards, by showing himself to be an agent only, prevent 
B. from setting off the debt against the price. 

(a) Relations with Third Persons where Principal Dis- 
closed.— Here, in the absence of evidence to the contrary, 


{x) Sections 12, 13. 

(y) See pout, pp. 250, 284. 

Kklations with TniRi) Persons. 


Iho principal, and he alone, ims liabilities aii«i rijjhts. 
Hut an aj^ent may, under certain circumstances, !»o 
liable even in this case, e.g., (i) if he a<^rees to be so ; 
(ii) where the principal does not exist, or is not in a 
condition to be bound by the contract (2) ; (iii) if the 
contract is l)y deed, and the agent executes it in his own 
name ; (iv) when the custom of trade makes him liable. 
In some of the above cases, however, the agent may 
incur no personal liability, as where the terms of the 
contract show that he was never looked to for pay- 
ment (a). If the contract itself is reduced to writing, 
and in it the agent appears as principal, he is bound, 
though as a fact it was known at the time that he was 
bargaining as agent only, unless he can show that the 
contract was so drawn up by mistake ; and this follows 
from the general rule, that oral evidence cannot be 
admitted to vary a written contract (6). 

It was at one time thought that where a home agent 
contracts on behalf of a foreign principal there is a 
presumption that he alone is liable, unless the contrary 
intention plainly appear-; from the contract itself or 
the surrounding circumstances (c) ; but it is doubtful 
whether the presun^ption, or the custom on which it is 
supposed to be founded, still exists, or if it does whether 
much weight is to be attached to it. At any rate, if 
the contract is in terms made on behalf of foreign 
principals by an agent who has authority to pledge 
their credit, then even though the names of the 

(?) Kdnrr v. «a.r/er (1807), L. R. 2 C. P. 174. 

(o) Gadd V. Houghton (1876), 1 Ex. D. 357. 

\h) Higyins v. Senior (1841), 8 M. & W. 834. See notes to 
Thomson v. Davenport (1829), 2 Sra. L. C. (12th ed.) 355 ; and Bee 
Wake V. fforrop (1861), 6 H. & N. 70S ; I H. & (J. 2U2, as to mistake. 

(c) Lord Tentbrden in Thomson v. Davenport (182!>), 9 B. & C. 
at, p. 87. 







l)rin(^ipals are not disclosed l)y the coutrart, the ayent 
will not he liable and the principals will bo ((/) . 

An a^ent may sne on a contract though his principal 
bo disclosed, if ho has an interest {e.g., lien) in the pro- 
ceeds ; for this reason an auctioneer may sue for the 
price of goods (e). 

Moreover, when a third i)aity, knowing who the real 
principal is, elects to give credit to the agent personally, 
and the circumstances of the case enable him to hold 
the agent liable, his right of action against the real 
principal goes. The leading case on this subject is 
Palerson v. Gandaseqniij). There the defendant, a 
Spanish merchant, employed L. to purchase goods for 
him, and the plaintiffs sent goods which L. and defen- 
dant in plaintiffs' presence inspected, and the price was 
discussed. L. ordered the goods, and invoices were 
sent to L. in his own name, the plaintiffs debiting L, as 
their debtor. Eventually L. failed, and an action was 
brought against the defendant. Judgment went for 
the defendant on the ground that "the plaintiffs in 
this case might have elected whom they would have 
as debtor; and here they seem to have made their 
election " (g). 

(b) Relations with Third Persons where Principal 
Undisclosed. ~ln this case the general rule is that the 
contract may be adopted against or by the principal 
or the agent at the wish of the parties. In Sims v. 
Bond [h), one branch of the rule was thus expressed : 

((/) Miller, Gihb tfc to. v. Umith and Ti/rer, [Iltl7J2K B 141 • 
Mercer v. Wright, Graham d- Co., 33 T. L. R. 343. 

(e) WiUiamsv. M illi iigton {IISS), 1 H. Bl. 81. 

(J) (1812), 2 Sm. L. C. (12th ed.) 341. 

(g) Remarks of Urose, J., in the above case. See also Addison v. 
Oatidaseqiii (\^\-l), 2 Sm. L. ('. (12th ed.) 348. 

{h) (1833), 5 B. & Ad., at p. .303. 

Relations with Third Pkrsons, 


" where a contract not under aeal is made by an a<,'ent 
in Lis own name for an undisclosed principal, cither the 
a;^ent or the principal may sue on it." In Thomson v. 
Davenport (i), the other branch of the rule was stated 
by Tenterden, C.J., as follows : " If a person sells 
goods (supposing; at the time of the contract that he is 
dealing with a principal) but afterwards discovers that 
the person with whom he has been dealing is not the 
principal in the transaction, but agent for a third 
person, though he may in the meantime have debited 
the agent with it, he may afterwards recover the amount 
from the real principal." 

But an agent contracting merely as such for an 
unnamed principal will not incur personal liability, 
unless by reason of some usage or custom which is not 
inconsistent with any express term of the contract (k). 

If the principal sues upon the contract, he *- do 
so subject to any right of set-off that the thir*. »arty 
may have acquired against the agent before he knew 
him to be acting for a principal (l). In Rabone v. 
Williams (m), factors sold to Williams, and when the 
undisclosed principal sued, Williams claimed to set off 
a debt due by the factors to him, and the claim was 
allowed. Tiiis set-off cannot be allowed if the third 
party was aware that the agent was really such, although 
he was not aware of the identity of the principal, nor if 
by the use of ordinary care, or by making ordinary 
inquiries, he might have known ; thus in the case of a 
sale he should show that the contract was made bv a 

(i) (182'.J), 9B. & Cat p. 80. 

(k) fhili-hir.xfm V, Tothnm {!873), L. H. H r. P. 482. 
(/) George v. ClagM (1797), 2 Sm. L. C. (12th ed.) 130, and for a 
later example, see Montagu v. Fonuood, [1893] 2 Q. B. 350. 
(m) (1785), 7T. R. 300 n. 




pnrm.n to whom the piiiuijml had inliii.stnl pumnHHum 
••f tho ^(M.d», thut that person H(,ld tliem u.s his own 
goods iu his (uvii luinie, and that he (tlio buyer) rrason- siii)posed the agent t.. be the principal, and that 
the Met-ofI tluiincd accrued beioro he was undeceived (n) 
rn Cooke V. Eshclbyio), L. & Co. .s.,hl V. cott<.n in (heir 
own names, re^illy on behalf of M. (". know that L. & 
Co. sometimes sold for principals ami sometimes on 
their own account, but did m)t know, and did not in- 
<iuire whether in this case they had or had not principals. 
It was decided that money owed by L. «fc Co. could not 
be set of! a-aiiist the price of the cotton ; Lord Watson 
saying, that to entitle a purchaser to s. t off a debt due 
by an a.^ent against one due to the ijrincipal, it must 
bo shown " that the circumstances attending the sale 
were calculated to induce, and did induce, in the mind 
of the purchaser, a reasonable belief that the agent was 
selling on his own account, and not for an undisclosed 

If the agent sues on the contract, a debt due by the 
l)rincipal cannot be set off against it, for the principal 
being undisclosed no credit was j;iven to him, nor was 
there any concealment that could be injurious to the 

If in the contract the agent describes himself as 
principal, there is no right of action in the actual princi- 
pal ; the agent alone can sue. In Humble v. Himter (p), 
an agent entered into a charter-party and described 
himself as " owner "• of the ship; it was held that 

(«) 8a,imz,i V. BnnsUji (1805), 18 C. B. (N.S.) 407; Borrits v 
iw/ierm/ 0«owa« i>a;i A- (1874), L. R !) C P 38 

':") (!>1H7), !l' App. (,'as. 271. 

(p) (1848), 12 Q. B. 310. C/. Fred Dni.jhom. Ltd. v. JiederiaUie. 
boLi'jet TmnaatlancHc, [1919] A. C. 203. •«»•''• neaenakUe- 



fiviilenre was not admissible to show that unothor was 
principal, nor could that other av. on the contract. 
For if the principal allows the u^ent to represent himself 
us principal, the agent alone can sue on the contract 

T\w third party (as stated above) may brim; his action 
a<;ainst either the a«^ent or the undisclosed principal, 
and oral evidence will be admitted to show that a 
written contract purporting to be made by a certain 
person is in reality made by him as agent. The rule 
soems to be, that though verbal evitlence cannot be 
allowed to discharge a person, y»!t it will be admissible 
to show that a party apparently not liable is liable in 
reality. Thus, A. agrees in writing with B. t») buy 
goods, nothing about C, the principal, being contained 
in the memorar "., If C. wants to sue, or if A. wants 
to get discharged oral evidence will not be admitted to 
show the facts, but if B. \.ants to sue C. h« may prove 
orally that C. is the principal (7). 

The agent must, however, establish privity of contract 
between his principal and the third party, to render 
the former liable. Custom may do this. Thus, a stock- 
broker who lumps the orders of several clients in one 
contract (apportioning the shares purchased in his 
books) will under the special usage of the Stock 
Exchange establish privity of contract between the 
jobber and the clients for whom he (the broker) acted 
as agent (r). 

The remedy against the undisclosed principal may 
also be lost to the extent that the principal has in the 

iq) See notes to Thomson v. Daienjiort (182U), 2 Sm L C (12th 
ed.) 356; Trueman v. Loder (1840), H A. & E. rm\ ihaaina v 
Stnior (1841), 8 M. &, W. 834. 

(r) Scon V. Godfrey, [1901] 2 K. B. 72ti ; (> Cora. Cas 22(i 



meantime lionestly settled with his a<.fent. This rule 
applies strictly wliert! the existence of a principal at 
all was not disclosed at the time of the contract ; but 
if a principal was known to exist although unnamed, a 
settlement by hini with his agent will only be valid 
against third parties if their conduct justified him in 
assuming that they looked only to the credit of the 
agent {s). Thus, defendants employed C. to buy oil ; 
C. bought some of plaintiffs, saying it was for princi- 
pals, but not naming them ; the terms were cash on 
delivery ; it was not an invariable custom to pay on 
dehvery ; defendants, supposing the cash had been 
paid (which was not the fact), settled with C. ; when 
C. became insolvent, plaintiffs sued the defendants :— 
Held, defendants must pay. though if the plaintiffs had 
led the defendants to believe that the agent and they 
had settled matters, the defendants would have been 
protected (0. So in Anmirotig v. Stoken {u), it was 
decided tliat a vendor who has given credit to an agent, 
believing him to be the principal, cannot recover aj^ainst 
the undisclosed principal if the i)iincipal has bona fide 
paid the agent at a time when the vendor still gave 
credit to the agent, and knew of no piincipal. 

The liability of principal and agent is alternative and 
not joint, and though the creditor may be entitled to 
elect against which of them he will enforce his remedies, 
any unequivocal acts showing an intention to hold one 
of them liable will discharge the other (a;). If the 

(s) Inine v. Watwii (1880), 5 Q. H. I). Iu2 414- ]Jn,i. 
/M;;(1882). 9Q. H. 1). 023. ■ ^^^. -^i , Vau. 

(/) Irvine v. Wdlevn (iSbO), u g. B D 102 

(«) (1872), L. R. 7Q. H. M8. 

(x) Scarf V. Jnrdint ;I882), 7 App. (as. ,145 
|). Iltl. 

on V. 

See also, miie. 

Relations with Third Persons. 


creditor obtains judgment on the contract against the 
principal, he cannot afterwards get judgment against 
the agent, nor, if he gets it against the agent, can he 
afterwards succeed against the principal (y). 

Rights and Duties ivhen the Principal is Non-existent. 
—Although an agent expressly contracting as such 
cannot generally sue in his own name, he may do so if 
the contract has been partly performed after the other 
party has had full notice that the supposed agent was 
the real principal (2), and in a charter-party a person 
contracting as " agent of the freighter " may declare 
himself to be the real principal or adopt the character 
of freighter himself (a). 

If a professing agent names a principal who is non- 
existent or incapable of contracting, the agent may 
himself be sued. In Kelner v. Baxter {b), the defen- 
fants, on behalf of an intended company, agreed with 
the plaintiffs to pay for goods to be supplied to the 
company ; after formation of the company, the goods 
were supplied and consumed, but the court held that 
defendants, having contracted as agents for a non- 
existent company, were personally liable, and that 
no subsequent ratification or substitution of liability 
was of any avail to them without the consent of the 

Liability of Principal for Money Borrowed without 
Authority. — In some cases where an agent borrows 

(y) Kendall v. Hamilton (1870), 4 App. Cas. : per I'airns, L.C, 
at p. 514. 

(z) Rayner v. Grote (1846), 15 M. & W. 359. 

(a) Schtnalz v. Avery (1851), l(j Q. B. 655; Harper «fc Co. v 
Viger^ firo*., [1909] 2 K. B. 549. 

(h) (1867), L. R. 2 (J. P. 174 ; and see Re Empriiss Engineering Co. 
(1881), 10 (Jh. D. 12o ; Hcoil v. Lord Ebury (18U7), L. R. 2 C. K 255. 




i: f 

money on behalf of another without aiiv authority or 
iu excess of his authority, although the mere fact of the 
borrowinir may impose no liability ou the principal, yet 
the lender acting in good faith has an equitable right 
to recover against the principal any part of the money 
borrowed which has in fact been applied in payinij 
legal debts and obligations of the principal (c). And 
even where the agent is known to have no authority to 
borrow, yet to the extent to which the money borrowed 
is applied to payment of legal debts of the principal, 
the lender may assert this equitable right (d). 

Liability of a Principal for his Agent's Torts.~It is 
a general rule thni a principal is liable for the wrongs 
<^f his agent committed within the scope of the authority 
whether the wrongful act is done for the benefit of the 
principal or for the benefit of the agent and in fraud of 
the principal, if the wrongful act was committed ia the 
course of such business as the agent was authorised, or 
held out as authorised, to transact on account of his 
principal (e). In otlier cases the agent alone is liable, 
even though the tort was committed solely for and on 
behalf of his principal. The liability of the principal, 
where such exists, is no answer to an action against the 
agent ; the latter is also liable (/) ; but it will be remem* 

(188J , n Ch. \\ bl • affirmed sab novi. Cuuliffc Brooks d- Co. v 
Blackburn, rtc. BuMtng Socuiy ,1884), App. ('as. 8.57; Banm 
/t/«ev. J/oc^;er, [1906] 1 K. B. 103. Jianua- 

k! B. 3M ''""" '^"'^ * l-o^'^ranc" Co. v. Maison Cosway, [1913] 1 
(e) Lloyd V. Grace Smith d- Co., [1912] A. C. 170. See also Barwirk- 

186n 7 H * N^ r/ ^M^ [''"■>• ^- ^- 2 ^^- 259 ; Udrll v. Athertot 
( 874 ' L k fpc ' i ''f \Cammercial Bank of New Brunswick 
(1906] A C 43I '^' ^- ^'■"" ^'"^'*" Consolidated. 

(/) See Prto V. fi/fl//V.s(l8M), n Taunt. 657. 

Classes of Acients. 


bored that an agent who innocently commits a tort, 
within the scope of his authority, is entitled to an indem- 
nity from his principal (g). 

Classes of Agents (h). 

Factors. — A factor is an agent " employed to sell 
goods or merchandise consigned or delivered to him 
by or for his principal for a compensation " (i). He 
is sometimes called a consignee and sometimes a com- 
mission agent ; but a salaried servant who holds goods 
tor his master is not of necessity a factor, althoiigh he 
may have a special power of sale. A broker and a 
factor are different sorts of agents, the chief points 
of difference being that the broker has not possession 
of the goods, whereas the factor has {k), and whilst the 
factor may sell in his own name, the broker may not (l). 
The powers of a factor are : (i) to sell in his own 
name {I), subject to the ordinary rules relating to 
sales for undisclosed principals ; (ii) to give a warranty, 
if it is usual in the course of the business {m) ; (iii) to 
receive payment and give valid receipts (n), or sell on 
credit to a reasonable extent (o) ; (iv) he has an 
insurable interest in the goods (p) ; (v) since the 
passing of the Factors Acts he has powers of pledging ; 

(g) Atitc, p. l;$3. 

(h) " Mercantile agent " is a term which covers many oi" tlie 
following : the meaninj; of the term " mercantile agent,"' and tiie 
position of those who fall within it are referred to ante, pp. 141 — 144. 

(») Story, Agency, s. 33. 
; Ik) See judgment in Stevens v. BiUer (1884), 25 Ch. D. 31. 

(l) See Baring v. Come (1818), 2 B. & Aid., at p. 143. 
_ (m) Brady v. Todd (ISM), 9 C. B. (s.s.) 592 ; 30 L. J. C. P. 223. 

(n) Drinkwater v. Goodwin (1775), i Cowp. 251 ; Fish v. Kempton 
(1849), 7 C. B. 687 ; 18 L. J. C. P. 20«. 

(o) HoiigMm. v. Maltheu's (1803). 3 B. & P., at p. 489. 

(p) Post, p. 302. 








(v.) ho has a lion for ti,n oenoral balanco of his rhar.^es 
on any ^^oo(]« that have come to him gua factor and';,n 
tho process of such .oo<Is (y). This lien he loses if 
ho rich vers possession of the ,oods to the owner (r), 
l>"t a n,ht of set-of! which the third partv nmv have 
a'-M.nst h.s pmuipal will not afl'ect his henh). 'it has 
>oon deeded, that if he becon.. snrety for his principal 
he has a l.en to the extent of his liahilitv {<j). Even if 
he sells the ^^oods in a manner speciallv directed bv 
h.s prmc.pal, an,l in his principal's name, his lien still 
attaches (s). 

.. ^'•^'^•^'■•'— A broker is defined bv Storv /<) to be 
■ an auent employed to make bargains and contracts in 
matters of trade, commerce, or navigation bet wo, 
other parties for a compensation commonlv called 
brokerage." He is an a^ent of a mercantile character 
and one who n.akes a merely personal contract for 
another h not strictly a broker; ...,., A. makes an 
agreement on behalf of B. to sin, at a concert; A 
would not be a broker («). 

Brokers were at one time reonlated and controlled bv 
tlie Corporation of London ; this is so no 

They are distin,nishable from factors; factors have 
possession of the u.ods (x), and brokers have not • 
moreover, whilst a factor can sue and a.t in his .>wn 

(?) Drinkwater v. Goodwin, .v<pr<t 
ir) Kruyerv. U //cox (17r,5), Amb. 252. 
(.s) Stere».s v. JhUu- (18S4), 25 Ch. 1). .31 
(0 ooction 28; and see Krftt T i-^ i' i ,, ,.. 

T- H.7Q.B.,atp..i2a. '^«*^^t- J- '" fouler v. Holhn, (1872). 

{") Soc J/,7/„n/ V. /IiujheMmi), 10 .M. & AV. 174 
/>""A0,s;4), L. li.uc. r\47OM0(\ r " '' '^'"'" 

Classes of Aoents. 


name, a brokei- cannot ; factois may buy and sell in 
their own names ; hiokors (apart from special custom) 
cannot (?/). A broker's mode of dealinc; is as follows : 
when he makes a contract tlie terms should be entered 
by him in his book atid sij^ned by him, and memoranda 
sent to each party ; that sent to the buyer is called 
the hourjht note, that sent to the seller the sold note. 
Ordinary forms of these notes are : " bou<i;ht for vou 

of C. D." ; 


Id for 


bou<j;ht of vou bv me.' 

A broker is primarily airent for the vendor, but when 
the bargain is completed, he represents both parties ; 
therefore a signed entry of the contract in the broker's 
book is sufficient to satisfy s. 4 of the Sale of Goods 
Act, 1893 (2). If there is no signed entry, but bought 
and sold notes, which correspond and contain all the 
terms of the bargain, are signed by the broker and 
delivered to the parties, these constitute a sufficient 
meraorandun). Tf the bought and sold notes diffir, and 
there is no entry (or an unsigned entry only), the 
contract falls through (a). 

Generally speaking a broker is not liable on the 
contract, if he is known to be contracting qua broker 
merely, though the name of the principal be not 
disclosed in the contract note (6) ; but he may be 
made liable by custom (c), or contract, or if on the 

(I/) See Baring v. Corrie. ( 1818), 2 B. & Aid. 137, 143. 148 ; Fairlie v. 
Fmton (1870), L. R. 5 Ex. 169. 

(2) Thompson v. Gardimr (IS16), 1 C. P. D. 777. 

(a) Sievemight v. ArchihnU (1851). 17 Q. B. 103. The decisions 
on the effect of brokera' books and note.s are very conflicting. The 
authorities are fully considered and general propositions deduced from 
them in Benjamin on Sale (5th ed.), pp. 284—305. 

(6) Southwell V. Bowditch (1876), 1 C. P. D. 374. 

(c) Fleet V. Murton (1872), L. R. 7 Q. B. 126 ; in Pike v. Ongley 
(1887). 18 Q. R. D. 70.S. a hoji hrakcr -xaR, in rons'^quence o{ c-istom, 
held liable for non delivery wlion a contract note was worded thu.s : 
" Sold by [liffnuI'Dil] to \phi»tiff\ for and on account of owner." 



If ! 

1 i 

>t- he appears to n.ntract for himself as princip.-.l. 
i a<-cordauc-e w.tJt ,,euoral principles of a.encv. M.. 
other party may hold the undisclosed principal liable 
Brokers have not possession of ,oods, Ld hence th v 
have no hen : but to this there is an exception in th'e 
ase ot an msurance broker, who has a lien on the 
I'-hcy for lus general balance, and this extends oven 
ajl^nst the principal of an agent who .mplove, 
I .m, provKled that he had no notice of the agent's 
< liaracter (r/). «r><^iiL s 

Insurance Brokers.-Xn insurance broker is the name 
i.-ven to an agent who is employed to negotiate a policy 
of manne msurance. He stands in a peculiar portion. 
Accordmg to the ordinary course of trude betvveen the 
assured, the broker, and the underwriter, the assure] 
Jo not m the first instance pay the premium to the 
broker, nor does the latter pay it to the underwriter 
But as between the assured and the underwriter the 
premmms are considered as paid. The underwriter to 
whom m most instances the assured arc unknown, looks 
to the broker for payment, and he to the assured. The 
latter pay the premiums to the broker only, and he is a 
middleman between the assured and the' underwriter 
But he ,s not solely agent ; he is a principal to receive 
the money from tiie assured and to pay it to the under- 
writers (e). Hence the broker is debtor to the under- 
writer and creditor of the assured for the premiums ■ 
he receives the policy from the underwriters, over which 

(d) Mann v. ForresUr (1816), 4 Camp. 00. 
I>,^.r^c^Co. of Milan v. ^... Ji^^t^^;^ i' ^,; -i;^- ^-«- 

Classes of Agents. 


he lias a lien u.s ajfainst the assured lor the premiums 
and chaiues (/) ; tlie uuderwriteis camiot sue tlie 
assured for the premiums ; but in the event of a lost; 
the assured may sue tlie underwriters direct. It may 
be that the underwriter and the broker have cross- 
claims against one another. Can the underwriter assert 
such set-ofi aj^ainst the tiaim of the assured ? As a 
rule he capuot, but usa,i;e, kntnvn to the assured at the 
ilatc of effecting the policy, will authorise such a set-off ; 
so also may undue delay on the part of the assured 
prejudicing the position of the underwriter or the state 
of his accounts with th • broker (^f). The insurance 
broker must prepare tor his principal a proper policy 
duly stamped ; and he must exercise diligence in 
procuring an adjustment in the event of a loss covered 
by the policy. 

Shijthroker. — A shipbroker is f.n agent employed to 
arrange for the chartering of ships ; if a charter-party 
is signed, he generally becomes entitled to commission 
from the shipowner. 

Bankers. — The banker is the agent of the customer to 
pay sums of money as ordered, but the ordinary relation- 
ship between banker and customer is that of debtor and 
creditor ; the banker being creditor when the customer's 
account is overdrawn, the customer being the creditor 
when the balance is in his favour {h). The customer is 
entitled to draw cheques on the banker to the extent 

(/) Marine Insurance Act, 1906, 8. 5.1 (2) ; and sec Fisher v. Uriuth 
(lS7!>),4App. Cas. 1. 

ig) iScolt V. Irving (IKil), 1 B. & Ad. 605, tiTJ. 
(h) Foley v. Hill. (1848) 2 H. of L. C'as. 28. 


it ! 





f the n.ouey .tandm, to hi,s credit (.) ; the banker has 

a enorall.3nonallsea„.itiesoftl,en.stomerdep^^^^ 
tb Inm a. baaker t., .secure any .su.n in which the„er may be mdebted to the banker unh-s, there 
be an express contract, or circun.stances that show an 

ni hul contract uu-onsKstent with lien (k). With regard 
to b. Is • a banker has authority to pay bills accepted 
b> the customer and made payable at his bank (/), but 
he IS not bound to do so (w). ^' 

The position of a banker who pays a lorded instrun.ent 

dealt ilitlT' 'TT"^ ''''^' " ^"■^«^1 iudorsement is 
dealt with hereafter (n). 

.l^^.«>..c>-..--An auctioneer is a '• person authorised 
to sell goods or merchandise at a pubhc auction or sale 

or a recon.pense " (.). He is agent for the seller 
(^vIth authority to do all such acts as come within an 
auctioneers province), and when the goods have been 
Wked down for the buyer also, and his signature is 
then ulhc.ent to satisfy the requirements of s. i of the 
.Statute ot Frauds or s. 4 of the Sale of Goods .\ct, 1893 
uuless, indeed, he is himself the vendor (p). Unless 

e^prmcipal is disclosed, he is personally liabl' and mav 
'"•nself sue. He must not delegate his authority (,/) 

i^>-ep H .o long a. it is t!n:Ki vo^Slci"^^'^' '"^ '''" '^^"'^-' '^^ 

(n) J'o.H, jjp. -.ior,, 35(1. 
( S & y Vict. c. 1 .5. ss"2?4); ' ■ ^" '^"^t'oneer must have a licence 

eiiect of tl,e clcrk-.s ..uaXc ■ • }S/': \ '^ u^^'\ ''^'^''^- ^"^ ^ *»>« 
443, and Bdl v. //:,/7.:. J^!," j ■^■l fj;/../ '• ^^""^^'^ CS^a), 4 B. & Ad. 

(7) C'ofevv. rrccoMa/(ISU4),«j'v'er234,2o!. 




ho should sell only for cash (r), aud at the best price, is 
responsible to his principal for loss sustained through his 
deliverin'4 the goods without receivin;; the price (.s), 
and he is answerable for tlie proper storage of goods 
whilst tiiey are with hiui. Ho has possession of the goods, 
a special [)roperty in theiu, and a lion on them for his 
charges (s). He has implied authority to receive the 
procooils of the sale of goods, but only the deposit on a 
sale of land (0 ; he has also implied authority to sell 
gooils witiiout rosorvo, and if ho does so where a reserve 
has been put on the price, the seller cannot set up as 
against the buyer any sucli limitation of the auctioneer's 
authority, unless, of course, the buyer was aware of it (w). 
An auctioneer who sells "on behalf of A. goods which 
really belong to B., and who delivers the goods to the 
purchaser, is liable in damages at the suit of B., thcnigh 
he acted without knowl'-dge of B. s rights (x) ; but an 
auctioneer will not be so liable if lie merely settles the 
price and receives his commission, taking no part in 
actually transferring the property («/), or if the circum- 
stances of the case enable him to claim the piotection 
of the Factors Act, 1889 'z). 

Wife. — A husband is bound to support his wife save 
under peculiar circumstances wJiich need not be dealt 
with here, and if he fails to ilo so without just excuse, 
she may pledge his credit for necessaries. But although 

(() L'lik-s.s it is custuiiuuy t^' acLOijt a chtqiK-, and hv acts without 
neglij,'em,i' in taking one [Fairer v. L<K:y(\S^{\. 31 Cli. D. 42). 

(v) WilUams V. Millii:<jloit (1788), 1 H. HI., u, p. 84. 

(0 Willianiii V. Millinijtoii, aiiura, as to goods :' Siikes v Gili-< 
(183y).5M. &W. G4-.,a3toland. ./ • u* 

{a) Rainbow v. Howkins, [1904] 2 K. B. 322. 

(x) CotiHoliildtud Co. V. Curtis db Son, \ !S>.!21 ! 

(//) Burka- V. Furlong, [1891] 2 Cli. 1 

Q. H. 19.3, olH). 

(z) IShcnifton v. Hilton, [1894] 2 Q. H. 452. 


I ; >'i 




H Im^baad .s l,oun,l to j.n.vid. Lis w.f. w.t). nece..ari... 
^ '*•; weunxi. api.arel, ho is not buu.ul U, ^^iv,- it to 
'MT am J.. ,„uy .stipulate that it is to re.,.aiu his absolnt,.. 
F'X'lKMfy to h.. worn only ihirin^^ Im plea.sur., („.. tIm^ 
n«^»t to pWl,e the husbands .rodit for noclL^ 
IH onI.v nnphcd authority which n.urria.c ,ive.s to a wife. 
•nd the presumptio,. that she has surh authority to 
> ec^e her husband's credit may be rebutted by proof 
hat he nmde her a sufficient alh.wan.o, althouofi this 
lac^t was not known to the person who supplied the 
uecessanes(6). .Vn action will not lie bv a husband 
against lus w.fe to restrain her fro.n improperly pled-dn-^ 
'"■s credit (c). A husband, however, n.a^■ " expre^slv" 
Hnthonse h.s wife to bind him by contract, or nvav 
■so act as to be est.,pped from denyin^^ that he has dom. 
■so. Thus ,f the husband has been in the habit of 
allowing the wife to incur debts on his credit, and has 
paid the money without saying anything that w<mld 
lead a tradesman to believe that the authority was not 
^'.ven or was revoked, the tradesman may assume that 
the wife has authority imtil the contrary is notified to 
mm. But unless the husband so misleads the tradesman 
he may revoke any authority given to his wife without 
notice of any kind (b). 

Miscdlaneo>M.~The rights and duties of agents in 
their capacity of partners (^0, stockbrokers (.), ship- 
masters (/), and managing-owners (y). are dealt vvith in 
other parts of this Work. 

(a) liomhaa I'ojruii.l d- Co. v. Mark. fl'USi I K I' km <■ v 
(/» iMh. „hu,a V. .U,//o« (1881) (i A,,u ('as >4 ■ V/ 7 « '^^ ,, 

(r) »€Wt/-v (ivM,/,[l!tllill K. H. 714. 

((/) Post, p. Hi'J. ,/s „ , 

(t) Pool, pp. 527 a sea. /^v '^r.' ^'^- ^' ' ^'^^-• 

( i«u ) 


The law of partnership is concerned partly with the 
rights and duties of partners between themselves and 
partly with the lej^al relations between partners and 
third persons which flow from or are incident to 
the formation of a partnership. It is only possibh; 
in this book to give an outline of the subject and 
special works must be consulted for fuller informa- 
tion. The chief of these are Lord Lindley's work, 
and Sir Frederick Pollock's Digest of the Law of 
Partnership (6). The Partnership Act, 1890, is a statute 
which consolidated and codified the law of partnership ; 
and though it does not contain the whole of that law, the 
main principles of it are now authoritatively settled bv 
the statute. 

Definition of a Partnership (c). 

" Partnership is the relation which subsists between 
persons carrying on a business in common with a view 
of profit. But the relation between members of any 
company or association which is — 

" (a) registered as a company under the Companies 
Act, 18fi2, or any other Act of Parliament 
for the time being in force and relating to 

(a) 111 this chapter the references to sections arc to those of tlie 
Partnership Act, 1890. 

(•'') Untlerhill's Law t.f Partncrshi]) is a very useful book for 

(r) Section 1 . 





i ! 


tl.P roKistmtin,, of joint <o,nimnie.s (,/) : 

" (b) l..nn^,l ,„■ in.orporahul by «.r in purHuanoo of 
'itiy other Act of Puiliuinont or lottors patent, 
or Koyul Charter ; or 

" («•) a .-.Mnpany cn-a,^e<i in working mines within 
and Mubject t.) tho jurisdirtion of the Stan- 
naries (e) : 

"is not a partnership within the meania.' <.f this 

Partner.hip«, then, must be distin^nished from 
tradmir companies ; " the law <.f unincorporated ,s composed of litth- else than the law 
of partnership ,„odified and adapte<l to the wants 
of a larire and fluctuatin^r number of members" (f) 
and the same may (to a certain extent) be said of those are mcorporated. But the requisite modifications 
and adaptations in the case of incr.rporatcd companies 
are m.w so considerable that company law has become 
a branch d.stmct from that of its parent, partnership 
law. The ma,n .lifTerence between a <-o,apHnv and 
a partnership is this, that the formation ami existence 
01 a partnership depe.uls upon the mutual trust in, and 
personal relationship of. the members to each other 
whereas the formation and oxisten. e of a company does' 
not depend to any extent on this ; further, whilst in a 
partnership every member is entitle.! t.. take part in the 
rnanauoment of the business unless he bar.^.ins away 

^>^^>^n!:TTr'i:::;::\::z'r tt'^'' t' "- ^^^ -"-^ -- 

sul.jopt to i,s juris S^'T " '"'' T,"'"'' "^''^•■"•i'^e have beon 
(/; U.ulh.y.,„.|,Kl,„v<'i,„,,t..r(.lM, ,.,!.). 


Ins ri^ht, in .1 c..„,i,ariy f,|,o rnana!,'..mmifc is Inft to 

A purtaorshi,, ,p,y not c.u.U of ,nor« than twontv 
IHMsoas, or. ,n tho of a lu.iki.i. txvm, ton. Asso- 
".afc.ons oxcoodin,. thaso n..,nl.«r,s ..u.Ht l,« re.i«tered 
"'»acr th., Coin|,ani«H (Consolidation) Act Vjm 
..r .n.or,,orato<l J,y Ant of ParlianuMit or' letters 
piitont (h). 

In .ul.lition to deHnin. 'partnership'" in a general 
way, Hnd then oxpressly exdiulin,' bodies whi.h wo.dd 
otherwise amwer tlie terms of the definition, the Act (i) 
lays down rertain further rules for deter,„inin« the 
ox.stence of a j.artnership. Those rules define the 
principles applu-ablo to the consideration of typical 
cases, and serve very n.aterially to elucidate and 
oxplam the n.caninj. of "partnership." Thev are 
as follows : r . .m i 

"(l)Joint tenancy, tenancy ia conunon. joint 
property, connnon property, or part ownership does 
aot of .tsclf create a partnership as to anvthinu «o held 
or owned, whether tf.e tenants or owners do or do not 
share any prohLs (i). 

" (2) The .sharing of .^ returns does not of itself 
create a partnership, whether the persons sharing such 
returns have or have not a joint or con.n.on ri-d^t 
or mteres m any property fron. which .,r from the use 
ot which the returns are derived. 

(<j) It amy Ix- douljteil whether fhf.>j.. ,i;ff„,„„ i 

incorporation and thi wordi^T"h^e vIhuTtI 'T: 'l'" -^"^^ "' 
companies from partnerships!^ artner^hip Act distin^ruish 

(A) Companies (( on-solidution) Act. MlOx . | -ru., , , . ,. 

^::::r(Jzr '''''' " --p«"i- working miLt; ^iti-rx 

stannaries (ihiil) 
((■) Seetion 2 

(*) Section 2 (I) 



li ' 


V, I 

(3) The receipt by a person of a share of the profits 
ot a business is j.nma facie evidence that he is a partner 
in the business, but the receipt of sucli a share, or of a 
payment contingent on or varying witli the profits of a 
business, does not of itself make him a partner in the 
business, and in particular— 
" (a) The receipt by a person of a debt or otlier 
liquidated (0 amount by instalments or 
otherwise out of the accruing profits of a 
business does not of itself make him a 
partner in the business or liable as such : 
" (b) A contract for the remuneration of a servant or 
agent of a person engaged in a business by a 
share of tlie profits of the business does not 
of itself make [him] a partner in the business 
or liable as such : 
'• (c) A person being the widow or child of a deceased 
partner, and receiving by way of annuity a 
p<.rtion of the profits made in the business 
in which the deceased person was a partner, 
IS not by reason only of such recei])t a 
partner in the business, or liable as such : 
" (d) The advance of money by way of loan to a 
person engaged or about to engage in any 
business on a contract with that person that 
the lender shall receive a rate of interest 
varying with the profits, or shall receive 
a share of the profits arising from carrving 
on the business, does not of itself make^he 
lender a partner with the person or persons 
carrying on the business or liable as such. 
Provided that the contract is in writing, and 

(l) I.e., asoertained. 

Definition ok a Partnership. 165 

^gned by or „n behalf of all the parties 
thereto : 

'^(e)A person receiving by way of annuity or 
otlierwise a portion of the profits of a 
f^- aess in consideration of the sale bv 
hini of the goodwill of the business is not by 
reason only ^f such receipt a partner in the 
Misujess or liable as such." 
Whether a given person is or is not a partner depends 
upon tlie facts of the case and the intention of the 

n!.f '. i ''"'*'"'' '* ^^' considered that receipt of 
Pait of tlie profits of itself was conclusive proof of 
purtnoi^lup, but this is not so (^). In Cox v. Hick- 
-"■ in), the frets were these : A trader owed mone; to 
•-'any creditors, and these entered into an arrangement 
with hin, whereby he agi-eed to carry on the business 
under then- superintendence, and gradually to pay ofi' 
their debts out of a share of the profits. The cL'^wa. 
carried up to the House of Lords, where it was decided 
-somewhat against what then seemed the current 
uf authority-that such an arrangement did not con- 
v^s /. T'^T^'^ ''' '"' ^"^^ '^' '''' J'^id down 

on beha f of he creditors, so as to constitute the relation 
" agent and principal between them ? The Act now 
states the law us declared in Cox v. Hichr^n. 

lartnership is not the same as co-ownership; the 

iormer may include the latter, but the converse will not 

apply. They may be thus distinguished : (i) Co-owner- 

h i" '''"^^'^^y *b« r««ult of agreement, partner- 

«i"P i.> , eg., A. gives land to B. and C. in common ; B. 



U ^ if 

1 ; 


"H.l ( . aie nut p-^t.u.s. b,.t may ben.,1.0 m> I>v a-ieeTuent 
""""- ♦:';^'"^'^lvos. So (in. ( of a «hip h.v ia,i 
n<-^;e..anly purtiu-.^. a.ul it needs an aurecn.n.t. express 
•"• ;"4>li«a, to nuike tin.n so (o) ; (ii) Co-ownerslnp docs 
n..t. oi ne. essity, involve the idea of » orkini,' for profit • 
partnership does ; (iii) A co-owner lias a I.f free 
disposition over Jiis property witJiout the consent of his 
co-owner ; a partner who desires to replace himself bv 
another cannot, in the absence of a,,rcen»ent, do so with- 
out the consent of his copartner. 

Sharing profits is strong, though not conclusive, 
evidence of partnership (p). At the san.e tin.e the 
court will 00k at the whole of ihe evidence, and draw 
ho fan- inference of fact; only when nothin,^ more is 
known than that profits are shared, does a presun.ption 
ol partnership arise which must be rebutted (p) 

The Act further provides (q) that if anv person to 
whom money has been advanced on a contract (r) to pay 
a rate of interest varying with the profits, or anv buver 
of a goodwill who has en.ajred to pav the vendoi- a 
porti.m of the pn.nts in consideration of the sale, shall 
be adjudged a bankrupt, or enter into an arrangement 
to pay his creditors less than twenty shillings in the 
pound, or die in insolvent circumstances, the lender of 
any such loan shall not be entitled to recover anythin.r 
in respect of his loan, nor shall anv such vendor of 
a goodwill as afoiesaid be entitled to recover anvthin-^ 

{in B(idvle;i V. Con.'^olidiitc.d tinnk (18881 -{S f'l> I) •>•!& j 

.see Dains v. Duvi., [18;»4] 1 Ch 3<)3 Vj«J 401 //.// nl', ^^'"^ 

(1895), ti4 L J O 15 l-n " •„•,',, ' """»« v. ]\hxchdou: 

TnK FiuM Naajk, 



iu lespoct ..i tl.o .shuio vi {.i„fit,s .•(.iitnicted f.-i, until tJie 
claiUKs ot tl,e other creditors of the borrower or buyer 
It'- valuable consideration ' 

have been .satislied 

in money or money's woith 

In the cuse of a firm having' a place of business in tiu; 
United Kingdom, if the firni name does not consist of 
the true surnames of all partners who are individuals 
and the corporate names of all partners who are corpora- 
tions without any addition except the true Christian 
names or initials .,f the individual parti lirs and in . ses 
where a partner has dian-ed his name (except in the 
case of a woman who marries) the firm nuist be registered 
under the Registration of Business Names Act, 191(). 

The particulars requiring registration include the 
busmess name and the general nature and principal 
place of the business, and in respect of every iu.lividual 
partner must disclose his present Christian name and 
surname, any former Christian name or surname his 
nationality, and if that has been changed, his nationality 
of origm, his usual residence and any other business 
occupation that he follo-vs ; and in respect of every 
corporation which is a partner the corporate name and 
registered office must be stated (»). 

Particulars of changes in the constitution of the firm 
must also be registered (t). 

li there is default in registration the firm cannot sue 
on any contract entered into while it was in default 
unless the Court grants relief against the disabiUty. but 
It the firm is sued on such a contract it will not be 
precluded from asserting rights under the contract by 
way of counter-claim or set-off (a). 
(.;Sectiou3. (0 Section .5. ' (.) 6ea.ou 8. 



All rt'^isLojc.l linus piiblisli paiticulars nl iln\ 
names and nationality ol the partjiers in tl uadc 
catalnmies, trade circul.irs. show cards, and aisiness 
letters (x). 

. i 

!' ! 

Formation oi hie Comract. 
'Die contract is formed by consent alone, and no 
paiticular fonnality is required. Thv agreement may 
therefore be verbal or implied from conduct, but the 
general j)iacti(e is to liave a written agreement con- 
taining the terms on which the partners are to carry on 
their business, and this document is styled the Articles 
"f J'niiiicrnhip. Tins document may be a ileed. but it is 
not necessary that the agreement should be under seal. 

Who may he Partners. 
Alieii ciundcs or persons adhering to the cueiiiy iiia\- 
not be partners of an Eimbshman, and a iiartnership 
between such persons and an Englishman is dis.soived 
when war breaks out {y) ; but, where for the purpose 
of windin- up the affairs of a dissolved partnership an 
aeli(m is brou<;ht to recover a debt due to the firm, an 
alien enemy partner may be joined as a co-plaintiif {z). 

Lunacx- of a partner will not ipso facto dissolve 
an alieady existing partneiship. but it will be a 
gr.iund on which the court ma\ decree dissolution. 
An iniant luay be a partnei', and, until Jiis ciui- 

(.1) fcietiioii Is. 

(I/) Uu<jh ^Ur, ii^on and Sons v. .\, uiji^dUckijI J,i, CunuHuwjtn- 
Imlustru, [11)17] I K. ]!. 7(i;j, r. A. Tiii.s miu to tlic H(,i,6o of 
Lords, wiieio U \ui^ not disimtctl tliat tlic. partiicisliip bid bi't-n 
dissolved by the outbreak of war. A;- U) tiie nf.'lit.s of the eiiiniv 
jiartuer, see ;)(m/, |). !.S4, 

(c) Rodiiijutz V. Speytt Bio^., [I'lill] A. C, .j'.t. 

Liability of Partners. 


tract of partnershij) be disaffirmed, lie is a niem- 
bci' of till! tiadiu^ tirni, but ho does not thereby 
render himself personally liable to creditors (a). With 
tlicsc exceptions, the general rules of contract relating 
to the capacity of parties will apply to the present 

New partners may be admitted, provided the legal 
number is not exceeded (6), but, of cour j, the consent 
of all the original partners niust first have been 
obtained, either in the original articles or by subsequent 
aLrreement. In some respects the introduction of a new 
j)iirtner may be regarded as an act tacitly dissolving 
the <ild and creating a new firm. 

Kkuits and Duties. 

(i) Liabilities. 

LinbHittj on. Conlracts.- -Mi\(iYy partner is liable for 
the debts incurred by or on behalf of the firm in the 
ordinary course; of business ; in fact, to this extent, 
each partner is an agent of and for the others (c). 
This liability extends to wrongful acts done in further- 
iiiice of the partnership business. Thus, where it was 
witiiiu the course of a business to obtain information by 
legitimate means as to contracts made by (iompeting 
lirms, and one partner bribed the clerk of a competitor 
to disclose such information, the firm was held liable in 
<lamuues (d). 

But partners are not liable on contracts entered into 

[a) Loidl v. Beaucliamp, [1894J A. (.'. at p. (ill, per Herschell. 
(6) AiUe, p. I(i3. 
(/') Section 5. 
(d) Uamlyn v. Hoanton <b Co., L1903] 1 K. B. SI. 

o 2 



bv Miembers ot the tiini outside the stctpe ol the 
oi the iiini, unless the partner was, iu iaet, specially 
authorised to make the contract (t). The implied 
authority of a partner to bind his tirni by acts done 
iu the ordinary course ol business cannot be limited by 
secret instructions, and a party who enters into u 
contract made by a partner in the ordinary course will 
be entitled to enforce it ai^ainst the lirm, notwith- 
standin'^ any limitation of authority, unless he knew of 
it at the time of entering into the contract, or unless he 
did not know that he was dealing with a partner (j). 

The liability on a partnership debt is joint, not 
several ((/). But the estate of a ileceased partner is 
severalh liable in due course of administration for the 
debts and obligations of the firm while he was a 
partner, subject to the prior pa\ment of his separate 
debts {/i). This must not be misunderstood. As a 
general rule every partner is liable for every penny of 
the firm's debts, and the creditor has Liie option to sue 
any or all of them. If lie obtains judgment against the 
firm, he mav is.>ue execution against the property of 
the members, and is not contiued to satisfaction out of 
the joint property. Tlie liability is jtnnt, but all are 
liable. He may sue eacii partner separately, but if lie 
obtains y«(/^/>ie/t^ against am of them he cannot enforce 
the judgment against any but tlmse against whom it 
was pronounced, nor can he afterwards gut judgment 
against the otiiers ; for the liabihtv being a joint- i.e., 
a siu'de,. sniul- liabihtA, has beconn^ iin'igeii in the 

^1.) >Suctiuu 7. 

(ij) btcLiuu 0; iiud act' Kuidult \. liainUtun (IMii), -1 Apj'. C'u.>. 
."•C-l ; LiMdij ^. ' :>i.-:>ii::t:li.! hfi I: !. (, Iss7),, W, I ll. L>. .VMi ; nni-!.scil 

I. II imotliiT iioiiit. :js ( ii. i). J:5s. 

(„} >.(.eUou 'j. ^>ti- lliKjd \. J-'iiic/, I ll'03i 2 K. Li. 212. 





jiidj^iiKmt. Snv aie his ri-hta difk-reut, tliuu^h lie 
does not ^et any payment uiidei the judgment. Thus 
ill Kendall v. Hamilton (i), A. and B. (partniM's) 
bonowed money from C. ; eventually C. sued them on 
the loan, and obtained a judgment which was not 
satisfied. Aftevwuid.s C. discovered that D. was a 
partner with A. and B. at the date of tlie loan, but 
it was decided that C. had lost his remedy a-ainst D., 
as the joint liability had merited in a judianent which 
was not pronounced a.j;ainst D. Had D. been dead, 
and his estate been in course «.f administration, D.'s 
estate would have been severally liable, i.e., liable on a 
separate contract to the same effect as the joint one, and 
this would not have been merged by a judgment ai^ainst 
the other contractors. The above doctrine (.f meruer 
has no application where there are distinct 
of action ; so that if a partner i;ives his own cheque 
lor the price of -()ods sold to the firm, the creditor may, 
if the cheque is dishontmred, recover judgment upcm it, 
without prejudicimi his rights to sue the firm or any 
member of it for the price of the j^'oods, if his judgment 
remains unsa^^istied (k). 


Outyoiny Part noii.— Whan :'■ partner retires, tlie 
other partners may avrtse to hold hira free of jdl 
liabilities already incurred, and f\m. if assented to by 
the creditors, v^ill give him a complete release ; if the 
( if'ditors are not parties to tins agreement, either 
expressly or by implication, so fa'- as they are cotuerned, 
ho is still a debtor (/) ; but he may liavo rights of 

[!) tlsT'J), 4 Ai-p. las. OU-t. 

Ik) We,/.! l',:)s.^,r V. i:ran.-~, [IsH;,] 1 Q. H. 108. 

(/) Soctioa 17 CZ), (;!). 


iiul<jinnifv u^aiust his hitc purtncis. Thus,, A. and B. 
iui- liaiikurs. ('. and 1). mv. admitted as partuers, and 
notice ol this icaches the customers ; soou after, A. and 
H. ili(!. hut ('. and D. cairv on the business under the 
<>U1 name, and depositors, prior to the death of A. 
and B., h>ave their nionev with ('. and 1)., receiving 
interest from the haidi after the death of tlie okl 
partners , the bank fails, and the depositors prove 
against (.'. and D. ; this ct)nduct as a whole may 
amount to a tacit acknowledgment of the release of 
A. and B., and of the substitution of C. and D. as 
debtors. tSucli a release would result from what in 
called '■ novation '' (the substitution of a new debtor for 
an old one) ; but the i)arty desirous of setting up such 
a release must be in a position to show conduct on the 
part of the creditor inconsistent with a continuance 
of liis liability, conduct from which an agreement to 
release may bo inferred (m). 

If a member of a firm retires on an agreement with 
Ids partners that he shall in futuie be regarded merely 
as a surety for the firm's existing ilebts, the creditors 
who know this must treat the retiring partner as a 
surety, and may release him by giving time to the other 
partners (n). 

A change in the constitution of a firm wdl ternunatc 
a continuing guarantee given to the firm or to a third 
party in respect of the transactions of the firm so far as 
relates to future transactions, unless agreement to the 
contrary be made (o). 


hn) Per LiNTJLEV, L.J., in A'w«.>c v. Bradford Banking Co., [18U4! 
2 Ch., at p. 54 ; and see lie Head, [18!»3] 3 Ch. 42(5, with which rf. 
BiUjuroagh v. Uolnun (1877), 5 Ch. D. 255. 

{a) itouir. V. Bradfoid Bnnkinij Co., [iaU4j A. C 5a(i. 

(o) Sectiou 18. 



Pkhsoxs lfable ry Hor,T)r\r; ott 


In this statement of the law, freqtient nuntioti has 
l)eon made of tho expression " the firm," hut in law a 
lirm, as such, is srarooly reoorrnised ; in fart, until the 
present rules of procedure came into force, it is not too 
much to .say that its exi.stence was not Teco<,mised. 
" Tho lirm " is simply a short name .substituted for the 
Uiimes of the members composini,' the partnership ; it is 
a descriptitm and a description only (p). Rut partners 
tnav now sue or be sued in the firin name. 

Incomimj Partners.~X new partner is not liable foi- 
debts incurred before he entered the firm (7), save bv 
special airreement ; tlii.s agreement can ho enforccil 
I)y any of the parties to it. but not by un\- creditois 
merely as such. Thus, if on June 1st. A. k Co. owe ]}. 
enoo. and on June 2nd C. joins A. & Co.. aureoint!; to 
liive a premium and to be an.swera})le propoitionately to 
his interest for the £.j{)0, B. cannot sue V. unless ho, 
li., is a party to the contract, and uives consideration : 
cjl., agrees, if V.. makes himself partly responsible, to 
uive time to the firm or to an old partner (r). 

Persons Liable ns Partners hj Holding om<.— (Jenerally 
speakin?. tho partners alone are liahie. but there are 
classes of persons who. althou<rh not partners, are 
treated by law as .such ; are. in fact, estopped by their 
conduct front denyinsj; themselves to be members of the 
debtor firm. 

Those who, not being partners, are so treated, have 
been styled 7?/«sr-partners. and they become such in 

(p) See James, L.J., in Ex parte Corbelt (1880). 14 Cli. O 12(1 
(q) Section 17 (1). 

(r) See Bolfe v. Floiver {18(ifl) (.a case wliero snrh an arraneenient 
was iinplipd), L. R. 1 P. C. 27. 


! ! 

I i 



vivtuo nf tlio riilf that " wli«^n' a man ]i(>\dn Jiinispll' 
out as a |iiirfn<M-. or Jilli^ws otliors to do it. ho is tlicn 
pro|)(>ily cstojipofl from donvinu tiie charartpr In- lias 
assiitnod. iuid iipmi fhc faitl. of wliidi creditors may 
1)0 prosuiiied to have artod. A man ho actiri',' may ho 
riu'litly hold liahlo ns a partner hy cstoppol "' {s). Tho 
coiitiiict is .-nadf on Ids credit, and ho is answoraldo if 
joss is incurred, wlietlier tlie n^presontiition on which 
the CHMJitur actod was made verbally, in writinii. or bv 
conduct (/). An example of this is to be found in the 
case of Martt/n v. Graif (u). where A. introduced B. to 
r. as the moneyed partner ; ]i. was not a partner, but 
he stood by, and did not deny the statemejit. and he 
was lield answerable for a loss incurred. It is some- 
times rather harsh, but as p:yRf-:. C.,|.. said in Waugh v. 
Conner {v), it is necessary "upon principles of general 
policy, to prevent frauds to which creditors would 
be liable." l}iit repiesentations of this kind cannot 
be used auainst a man unless his conduct causes others 
to alter their condition on the faith of them. 

Upon this princijjle. where two persons, who thoui:h 
not in fact j)artne!s Jiave traded as such, bec(»mc bank- 
rupt, tlie assets of the business will be administered as 
joint estate {x). The executors of a dec* sed partner 
are not bound by the mere use of the old parlnershij) 
name by the survivors (y). 

A retirinu niend)er is not as su(h liable for debts 
contracted subsecpiently to his retirement, but he may 

(•,) Molliro Marrli rf; C,,. v. Covrl of Waul-- (]H12), L, ]{. 4 1'. (' 
nt ]i. 4K5. ' ■' 

(/) .Section 14 (1). 
(") (lH(i;{), 14 C. ]{. (N.s.)824. 

(') (1793), 2 H. m.-2:ir,. 

(y) be. i ion 14 (2). 



bo so if he continues an appinciit uienilxM- of the firm as 
nv'jaiils persons who are not awaro that he had ceased 
to 1)0 a partner. Fn order to escape liability for future 
transactions of the firm, he should uive actual notice to 
pvMsons <^'ho were in the habit of dealin'^ willi it. hut a 
notice in the London (Jazctte will be sulhcient as 
re<,'ards persons who had no dealinus witli the firm 
before the date of the dissolution or chanjie (z), and 
it is advisable in the case of local firms to yive further 
notice throui-h the local papers. A dormant partner 
{i.e., not known as a partner to the creditor seekint; 
to enforce the debt), is not liable for debts contracted 
after his retirement, ncitlier is the estate of a partner 
who dies (a). 


Linbilitjf for Wrovgs. — Tliis rests on a somewhat 
different footinir, for only those who are actual members 
of the firm are held liable to tlie consequences ; and it 
is not involved by mere holding out (6). Even true 
partners are not answerable for all wront^s of their 
copartners, but only if the wrongful act was committed 
whilst the partner was acting with his copartner's 
authority, or within the ordinary course of the firm's 
business ; or if the tort is misapplication of property, 
and either the money was received by the misapplying 
partner within the scope of his apparent authority, or 
was received by the firm, and misapplied whilst in its 
custody (c). 

The liability— which is joint and several— rests upon 

(;) S:-ftion3C. (1). (2). 
('I) S v,!tii)ii .•}i) (3). 

i'-) P..iiiwk oti l';iita'>r-<iii;) ( lOMi o;!.), p. tW, und Smith v. Baileii. 
[1891I2Q. H. 40.S. 
(c) Sectinm 10. 11. 



tlu! fini.lamontai piincipl.-. Mint witliiu a icitain limit. 
(l<'P<Mi(l<'nt upon til.' Miitiuo of partrior.Hhip husinoss. oach 
iiiftrubor of flie firm is iv^mt for tho rest (d). 

The casoM decided on this point are numoroiis and 
soniotimes dilHcult to distinmiish ; soino of th« most 
important are collerled hy Sir F. Pollock, in his work 
on Piutnciship (r). The followin-i are fair specimens, 
and will, for present purposes, sufTicientlv illustrate tho 
rules. Two soli<itors are partners, and to one <.f them 
a client hands monev to he invested on a specitict 
security ; thi.s partner makes away with the money, 
and the other is entirely ignorant of the transaction ; 
nevertheless he is liable, for it is within tl..^ ordinary 
scope of a solicitor's business to receive mimey to invest 
on specific .securities (/). Had the money been Lriven 
to invest at discretion the case would have been different, 
such investments not beini,' part of the solicitor's wc.rk (7). 
If a partner, bein}^ a trustee, improperly employs trust- 
property in the business of the firm, the other partners 
are not liable to replace the trust-property : provided 
that (i) any partner will be liable who has notice of 
the bre^ich of trust; and (ii) trust-money may be 
followed and recovered from the firm if still in its 
possession or under its control (h). 

(ii) Rights and Duties between Partners. 

When the parties enter into the contract of partner- 
ship, their rights are defined by their agreement ; this 

(u) Section 12 ; Pollock ( lOtli od), pp. 52 ei sea 

(e) Pp. 4!)— .->!'. ^^ ^ 

if) nidir V. liromley (1847), 2 Ph. 354. 

[g) IJarman v. .'ohnso» (IS.-Ja), 22 L. .7. Q. B. 297. Two more 
rocent cases may bo consultefl : Ckalher v. Twixde.n n«S.-,l. 2S (,'h. D 
•'540; and RluAtJt v. Moiilex, flSlWI 1 (;h 2'M'i 

(/i) Section 13. 

HrciiTs AND DiTtKs nKTWKF.N Partnkks. 177 



is ofton in writini,', and parinwiHliip I. ^ni,' a rontrai t in 
< nmiection with which «ood faith is deemed a main 
feature, tho terms in which it is expressed are hherallv 
r(»nstru«'d. The (hjties and obUijations arisini,' from 
the relation of partuorsfiip are rc<,'ulatefl, so far as they 
rtio t<»U(;hed. by any express contract ; if this does not 
reach all those duties and obli«,'ationfl, they are implied 
and enforced by law (i). Of course, there mav be an 
alteration of the tortus of the partnership bv consent, 
•expressed or implied {k), but the consent must be 

When the partnership expires by (effluxion of time, 
and the partners continue tofjether, there is an implied 
arriinuement that the partnership simll continue on the 
old terms so far as applicable, and the same rule af)plif.s 
when surviviu-4 partners continue the Imsiness after fli,- 
<leath of a mend)(;r of the old firm. Lord W'at.son 
said : ' When the tnembens of a mercantile fn/u 
c.Mitinue to trade as partners after the expiry of their 
ori-inal contract, without makinijj any new a^Teement, 
that contract is held in law to be prohm.ned or renewed 
bv tacit consent " (l). Xevertheless, if the i)aitner.ship 
is for a fixed teim. and is carried over, the new partner- 
ship will be at will only, and its continuance on the 
old terms will be presumed only so far as these are 
consistent with the incidents of a partnership at will (»?). 
.Amongst the ordinary ri;,'hts of a partner, as re>(ards 
his copartners (so fiir as they are unmodified by ajjree- 
rnent). are : 

(0 f^milh V. Jo/c^ (1841), 4 Bcav. .-)03 
(k) Section li). 

•• •••' '■ -'it/----.-; i/o;.- Cc. (la?!)). It .\\iii. las. 

on ttie particular words of tlie articles. 
>iii) .Section 27. 

'H, (leeidcci 



i I [ 



I. Tho ri'^ht to tako part in tlio business (n), and to 
liav.- tlift assistanc*^ of his copartners. No remuneration 
can ordinaiilv bo claimed (o). But compensation for 
extra trouble causf.d by the wilful inattention of a 
copaitnor to business may bo allowed to the partner or 
partners upon whom the additional burden is thrown (p). 

2. To have the business carried on according to 
agreement. Its nature cannot be chanued without the 
unanimous consent of all the partners ; in minor matters 
occurring in oi.linary course, a majority will bind the 
others (7). 

3. To pievent the admission of a new partner. No 
person can be introduced as a partner without the 
consent of all those who, for the time being, are 
members of the firm (r). A partner may assign his 
share of profits, or may mortgage it ; but this may give 
a right to the other partners to demand a dissolution, 
especially if it deprives the assigning partner of all 
substantial interest in the concern (s). 

Also, a partner, unless " at will." cannot retire from 
the firm without the consent of all : if the partnership 
is "at will," the partners are entitled to notice of 
intended retirement. 

A majority of the partners cannot expel any partner 
unless a power to do so has been conferred by express 
agreement (<). 

4. To be indenmifie.1 by the firm against personal 
liabilities incurred and payments made by him in 
the ordinary and proper conduct of the "business ; 

{>i) Soption 24 ((i). 

{')) Si'ctiDii 24 (,"■). 

(p) Mreii V. Itorhtm ns(il) 

((/) Spction 24 (S). 

(/•) Si-i'tion 24 (7). 

20 Bcav. r,20. 

(..\ T,in<l!ey (Stli f,l. ;. pp. ,;,;o, 001 
[I) Scot ion 2."i. 



or in or about anytliing necessarily done for tJie 
preservation of tlie business or property of the firm ; 
e.g., a partnership is formed to work a mine, and the 
business cann.)t be continued imtil a new shaft is sunk ; 
;i partner wlio pays tlie cost required is entitled to 
indemnity (w). 

5. To have interest at tlie rate of five per cent, 
per annum on any actual payment or advance to the 
lirm made by him beyond the capital he has aj^reed 
to subscribe, from the date of such payment or 
advance (x). Apart from agreement, express or implied, 
no partner is entitled to receive interest on his capital ; 
and if there is a mere a<j;reement to pay interest and 
nothing moro, such interest will only be pavable out of 
profits, i.e., it will not be treated as an outjiioincc or 
loss of the business (_?/). 

G. To have the books kept at the principal place of 
business of the firm, and to be allowed to examine and 
copy them whenever he may desire (z). The right of a 
partner to examine the books is not personal to himself, 
and he may employ an agent to whom no reasonable 
objection can be taken to examine the books on his 
behalf ; l)ut the agent must undertake not to make use 
of the information so acquired except for the purpose of 
advising his principal (a). 

7. In the absence of any special agreement, the 
partners are entitled to share equally in the capital and 
profits of the business, and must contribute to the losses 
equally {h). 

(n) .Section 24 (2), and E.r partr Chipwndak (1853), 4 J)e G. 

(,«) Section 24 (3). 

(//) Section 24 f4). 

{;) S,-!ti,,a24('J). 

i-n Bemrt v. ]Vebb, (lilUlj 2 Ch. bM. (h) SeetioTi 24 fl). 




a To be dealt with by his colleagues with the utmost 
«ood faith m all partnership matters. 

benefit he may denve which is obtained by him (with- 

til r '''''? "^ '^' ""'^'"'^ *^^"""^ a partnership 
ansact.on (.). ..,., a.. B., C, and D. are partners in 

'nmself as a su^ar merchant, the other partners beinc. 
oogn^ant. and not objecting ; A., withont'the knowledge 
of the firm, sells su^ar at a profit to it .-Held, h. mn^t 
account for and share this profit with the partnership (d). 
A partner who carries on a competing business without 
he consent ot the other, must account for and pav over 
to the firm all profits made by him therein (.) In 
^ hort. partners must act for the common advanta.^e 
"f all ,n anv .natter which affects the affairs of tho 
I>a.;tno,.h.p and n.ay hide nothin, from each other 
which may be material to thoir relations as a firm (f) 

another of a share m the partnership l)usines.. Tf in 
such a transaction th. purchaser knows, and is a^Jare 

an l.\ T' T" "'""'' '^'' partnership accounts 

tan the vendor he „n,st put the vendor in possession 

.f all material facts and not conceal what he alone 

Ivnows : and unless such information is furnished the 

sale may be set aside (g). 

After Dissol„tian.~.\M,,n the partnership is put an 
d to, new rights accrue to its members : 


(c) Section 29. 

(g) Law V. Law. [100')] I Ph. 140. 

(«) Section 30. 
(/') ^potion 28. 

RiGUTs AND Duties bktwekn Partners 181 

1. A public uotitication of the dissolution may be 
demanded by any partner, and, as the practice of the 
(Gazette Office is to require the signature of all the 
partners, any one may take action to compel a 
recalcitrant member to sign [h). 

1. Each partner has an equitable lien on the property 
owned by the firm at the date of dissolution, entitling 
him to have it applied in payment of the firm's debts, 
and then in payment of what may be due to the 
partners [i). If a partner lias been induced to enter 
the partnership by iraud or misrepresentation, and has, 
on that ground, obtained rescission of the partnership 
contract, he will be entitled to repayment of the 
ainf)unt given by him for his share, after the partner- 
ship liabiUties have been satisfied; and to secure 
payment of that amount he has a lien on the surplus 
assets {k). 

3. In settlin - the accounts between the partners 
after a dissoluti(m, subjecl to any agreement, the assets of 
tlie firm (includmg sums contributed by partners to 
make up deficiencies of capital) must be distributed in 
the following order : (I) In paying liabilities of the 
hrm to persons who are not partners ; (2) in pacing 
partners rateably what is due from the firm to them for 
advances as distinguished from capital ; (:i) in paviny 
each partner rateably what is due from the fiim to him 
in respect of capital ; (4) in distributing the ultimate 
residue among the partners in the proportion in which 

{h) Sections?. 

(») fSection ay. The right of a ijartuer to have the vuodwill sold 
whea the hrm uas been dissolved is referred to post p js2 

{k) Section 41. He is also entitled to stand in the' place of creditors 
for any payment made by him in re.spect of partnership liabilities and 

!,'lUhi H it" l'^'*''^',"'"^'^ I'y the person guilty of the fraud apkinst 
all the debts and liabilities of the lirm (ibid.). 






profitH are divisible (/). Losses (inchidini; deficiencies 
nt capital) must he paid hist out of pi.dits ; next out of 
capital: if this is exhausted, then individually by 
tlie partners, in the same pi-oportions as the profits 
would have been divided had any existed (/). 

Where partners have contributed unequal capitals 
and have a<rreed to sliare profits and losses equally, 
if there is a loss of capital and one of the partners 
is unable to contribute his share of the loss, the solvent 
partners are not bound to contribute for him. Thus, in 
Garmr v. Murm/, (/«), G., M., and W. became partners 
on the terms that they should contribute the capital in 
uneijual shares and divide the profits equally. On a 
dissolution, after satisfyin<4 all liabilities to 'creditors 
and tiie advances „f the partners, t!ie assets were 
insufficient to make g<Mjd tiie capital. A lar-er sum 
was due to a. than to M N(;tliin- culd be recovered 
from W. -.-Held, that the true principle of division was 
tor each partner to be treated as liable to contribute an 
equal third share of the deficiency, and then to apply 
the assets in payin- to each pai tner rateably what was 
due to him in respect oi caj)ital. 

4. Any partner may, on dissolution, re.juire that the 
pr..perty. iucludino tiie fTo„d\vili (w), shall ' a sold, and 
he )nay lestrain any otlier partner from doin- anything 
teiidin- directly to decrease t!ie value, e.r,., usin- the 
iirm"s name, when an attempt is being made to seH the 
goodwill. Ami tlie goodwill may be sold when a 
p.irtuc;- dies, [nr the right tn it ,[„cs not vest in the 
survivors (o). 

(in) \i:m] I CI,. ,-,:. 

1") See /ju.^l, j,j,. 'r.i i;tii. 

(o) Himlh V. Evcrilt (I>s5!(), l'7 Ihuv 4-l(i. 


•J. W lieu one partner on entering into a partnership 

ior a fixed term pa}-s a premium, and beft)re tlie 

expiration of the term the firm is dissolved, the court 

may order a return of all or of a certain auiount of this 

premium, but not when the dissolution is wholly or 

chiefly due to the misconduct of the partner who paid 

the premium, nor when the firm has been dissolved by 

an agreement containing no provision for a return of 

iiny part of the premium (p). The entire question is in 

each case in the discretion of the court, and such order 

will be made as, under the circumstances, will work 

justice. In Atwood v. Maude {q), one partner took 

another into business with him, asking a premium as 

(inmpeusatiun for the luiter's inexperience. After two 

years t!ie original partner demanded a dissolution on 

the ground of tiie latter's inccmipetence, whereupon the 

new partner sued the original partner for a dissolution 

and a return of the premium, and the court awarded 

dissolution and a return to the former of such part 

of the premhim as bore the same proportion to the 

total amount as the unexpired period of the term bore 

to the total term agreed upon. From this judgment it 

appears that the court will ordinarily order the return of 

the premium, having regard to the terms of the contract, 

the position of the parties, and their conduct, and that the 

amount will be calculated on a proportion similar to that 

taken in the case mentioned. 

6. When a member of a firm ceases to be a partner, 
he is entitled to a settlement in due course, and the 
amount due is deemed to be a debt accrniing due at the 
date of the dissolution or retirement, unless otherwise 

(/») Section 40. 

(g) (l«t)8), L. H. \i. (.L. 30U. 

i I 





»4 ! 






(/•). If the continuing or .suivivini, partners 
tiiule witli the fa{)itiil or assets ui the lirni without an}- 
tinal settlement of accounts, the outgoing partner or his 
estate is, in the absence of agicement to the contrarv, 
entitled to such share of the prohts made since tlie 
dissolution as the court may hnd to he attributable 
to the use of the outgoing partner's share of tlie assets, 
or, at the option of the outgoing partner or his repre- 
sentatives, to interest at the rate of five per cent, per 
annum on the amount of such share (a). It is advisable 
to provide for such an event in the articles of partner- 
ship, and to fix in them the basis upon which an out- 
going partner's share or his rights in the goodwill are to 
be valued. 

Where a partnership between a British subject and an 
alien enemy has been dissolved by the outbreak of war, 
and the business in England is continued by the English 
partner with the aid of the alien partner's share of'' the 
capital, the latter is not deprived of the rights conferred 
by s. 42, but nothing can be paid to him until after the 
conclusion of peace (t). 


It is quite settled that all partners are bound by the 
acts or admissions of one, if done within the scope 
of the business. Story says, "a partner, indeed; 
virtually embraces the character both of a principal and 
agent" (u). And in Baird's Case (x), James, L.J., 

(/■) iSection 4.!. 
(.») Section 42. 

i:i) Part!!oi->:!;ii., ^. 1. 

(X) (1870). L. K. 5 Ch., at p. 733. 



said, " iis between the partuers and the outside world 
(whatever may be their private relations between them- 
selves), each partner is the unlimited agent of every 
other in every matter connected with the partnership 
business, or which ho represents as partnership business, 
and not being in its nature beyond the scope of the 

But a partner is an agent only so far as he is acting 
upon, and within the scope of, the firm's ordinary 
affairs: that the act is useful to the firm is not 
sufficient, neither is it necessary ; the act done nmst 
be a furtherance of the ordinary business of the firm ; 
and even then (as has already been pointed out), the 
lir.n will not always be bound, for if a partner attempts 
Lo make a firm liable, though within his apparent 
authority, the firm will not be bound, if in fact he 
has no authority, and if this was known t.. the other 
contracting party, or by the exercise of reasonable 
dihgence could have been known ; e.g., a partner gives 
a partnership security in discharge of a private debt ; 
tlie recipient must show that he took it without know- 
ledge, and without such negligence as would amount to 
k-uowledge ; and Cockburn, C.J., said in one case, that 
HI a case such as this, the recipient would deal with the 
partner at his peril [y). 

Sir F. Pollock {z) deals with certain of the more 
ordinary transactions, thus : 

Every partner may bind his firm by any of the 
1 1 'Mowing acts : 

(a) He may sell any goods or personal chattels of 
the firm ; 

I'/) Kutdal V. Hood (1S71). L. 1{. ti Ex. 243 : and .see Pollook on 
Partnership ( 10th ed.). pp. 39 etseq " 

(c) Pollock (10th cd.), pp. 32, Xi. 






ILouul c.stiito ill laml iuii:,t b« conveyed 
In all t(i«j paitiici,;, or |)v una aiitlioii.sed 
In- (Am/.) 

(b) Ho may purchase ou account nl' the Jirm auv 

v'oods of a kind necessary for or usually 
employed in the business carrie<l on by it : 

(c) He may receive payment of debts due to the 

firm, and uive receipts and releases for 
tliem (d) ; 

(d) He may en,-;a,no servants for the partnership 

If tl> partnershij) is in trade, that is. if the business is 
one which depends on the buyinji and selling of goods (6), 
every partner may also bind the firm by any of the 
following acts ; 

(e) He may make, accept, and issue bills and other 

negotiable instruments in the name of the 
firm (c) ; 

[A member of a tmi-tradiny partnership 
may bind the firm by negotiable instruments, 
but only in those cases where it is shown to 
be within the usual course to issue negotiable 
instruments, the burden of showing this being 
on the person attempting to make the firm 

(f) He may borrow money on the credit of the 

firm ; 

(a) In llu; absence of expres.-^ or iiiiplud autlioritv, a jirivate tlelit 
due lo one partner i.s not disdiarged by payment to the lirni of vviiieh 
he is a member (I'oivdl v. liroJIiar.'it, | VM)\\ 2. Cli. lou). 

(Ij) I/i;/jiiis V. Bea-ichainj), jl'.tUJ :{ K. B Hiii>, p, r Lmu, J at 
p. ll'.i.'). 

(c) W'iion a j)artnur\s individual name eoineides witii tlie tirnfs name 
aud iie does not e.irry on u separate business, his air.-j.l c.Vrv lA a bill uf 
exchange is prima tacie tlic acceptance of the tirm. See YortMre 
Bankuiij Co. v. Bmtmn (1880), 5 (J. P. D. I0i>. 

Pkopekiv ok thk Firm. 


(}i) Jiti may, for tlie jmrpose, i)ledu(. any '^oods or 
iuu\s()iial cJiiittcLs;i to the iina. 

A partner lias no implied autlioiiiy to bind the 
linn by a d<!ed ((/), oi to j^ive a •;iiarunt(!e iu the name 
ol the firm (e). or to bind the liim by a submission to 
arbitration (/). 

TJie authority continues even after a dissolution, so 
far as is necessary properly to wind up the business and 
romplete pending transactions, save that a bankrupt 
l)artner cannot bind the firm by his acts (g). And 
where one of two partners dies, the survivin;^' partner 
may carry on the business for the purpose of finally 
winding it up, and may mortgage the real or personal 
|)roperty of the late firm for the purpose of securing a 
partnership debt (It). 

Property of the Firm. 

Tlie assets which are to make up the property of the 
firm should be defined as fully as possible in the articles 
of partnership. Unless otherwise agreed, all property 
and rights and interests in property originally brought 
mto the partnership stock or acquired, whether by 
purchase or otherwise, on account of the firm, or for the 
purposes and in the course of the partnership business, 
IS partnership property, and must be held and applied 
by the partners exclusively for the purpose of the partner- 
ship and in accordance with the partnership agree- 
ment (i) ; and property bought with the money of the 

. {(l) Sleiglitz v. Eggington (1815), Holt N. P. 141. 
(c) Breitel v. Williams (1S4!)), 4 Exch. 023. 
(/) Stead V. SaM (1825), 3 Bing. lUl. 
ig) Section 38. 

{h) In re Bourne, (1906] 2 Ch. 427. 
\i} Section 20 (I). 



firm is dfOMicd, uuloss a ccntnuv intention appears, to 
be partnership property (k). 

During the continuance of the tirni, the members are 
joint-owners of the property, i.e., each owns the whole, 
and the property is not divided up into portions which 
l)elon;^ separately to the members. In ordinary cases 
of joint-ownership, when one joint-owner dies, his 
co-owners succeed to his share : but in the joint- 
ownership arising out of partnership this is not so (/), 
and the representative of the deceased succeeds to his 
interest. It should bo observed that partnership pro- 
perty, whatever ' ; its nature, is, as between the 
partners, looked upon as personalty, and, therefore, 
on death, the personal representative is the one entitled ; 
but this may be modified by agreement between the 
partners (m). 

Claims of one partner against the other are subject 
tf» the Statute of Limitations, and the time runs from 
the date of dissolution of the partnership, or from the 
tlate when one partner is improperly excluded by the 
others from acting as partner (n). 

A partner's share is the proportion of the partnership 
a.ssets after they have all been realised and ccmverted 
into money, and all the debts and liabilities have been 
paid and discharged. 

A partner who assigns his share oi the propert)- to 
another person, either absolutely or by way of mortgage, 
gives, according to the terms of the assignment, th<) 
assignee the right to receive, in whole or in part, the 

(k) Section 21. 

(0 " Jim accresceiuli inter mercatores locum nuu /labet " 
(m) Section 22. 

(a) yj & 20 Vict. c. 07, s. 9; Knox v. Gye (1872), L. U .3 H J, 
()j(. ; Lmdley on Partnership (8th ed.), pp. 58« et ««,/. 




shaio of profits and (on dissolution) of tho propeitv 
which would have come to that partner; but the 
iissif^neo cannot during the continuance of the partnership, 
inspect the firm's books or interfere in the business (o). 
Tho assignee cannot complain of a bona fide a<,'ree- 
ment subsequent to the assignment to pay salaries to 
the partners even though this may diminish the 
profits (p) ; he must also accept the account of profits 
agreed to by the partners, but on a dissolution he is 
entitled to have an account taken for the purpose of 
ascertaining the value of the share assigned, irrespec- 
tive of any agreement between the partners themselves 
as to the value of such share (q). 


The rights and duties consequent upon dissolution 
have already been considered ; it now remains to show 
how, when, and on what grounds it is brought about. 
It may be caused in any of the following ways : 

1. At the will of a partner where no fixed term has 
been agreed upon (r). If the partnership was consti- 
tuted by deed, the partner desiring to terminate the 
partnership must give notice in writing ; in other cases 
verbal notice will suffice (s). But a partnership where 
no fixed term has been agreed upon, or a partnership 
entered into for an undefined time, may not be a 
partnership at will, if the partners have made an agree- 
ment to the contrary, e.g., that the partnership should 
be terminated " by mutual arrangement or ly " t). 

(o) Section 31. 

(p) lie Oancood's Truatu, [1903] 1 Ch. .i). 

(?) Watts V. DriscoU, [1901] 1 Ch. 29 

(i) Sections 26 (1), 32 (c). 

{s) Section 20 (2). 

(0 Moss V. Elphick, [1910J 1 K. B. 84(i. 





2. By dHuxion of tl.o tin..' aj,Tced up,. a ,i> Hie term, 
or if ftnt«n>.l into for a si.i.^le adventure or un,l.,rtakin«! 
by tho toniiination of that adventure or MM.IertHkiim(M)' 
.'V Transfer of a partner's interest- 
la) By bankruptcy .,r death, u.iI»wh ..tJierwisc 

ajfreed (x) ; 
(b) At the option of the other paitners. if any 
partner suffers his share to be ehart'eil hv the 
eourt for his separate debt on the appH.ution 
of any of his creditors (y). 
4. Occurrence of an event niakin- the partnership 
lUei^'al (z) ; e.g., war breaking out between the cf)untries 
in which the differont members of tho partnership are 
tradin<,' ; 

f). Fraud, making the original contract voidable ; 
0. In addition, the c<.urt may decree a dissolution of 
partnership in any of the following rases ; 

(i) Lunacy or permanent unsoundness of mind or 

a partner (a) ; 
(ii) Permanent incapacity of a partner to perform 

his part of the contract (h) ; 
(iii) Misconduct of a partner calcdated to prejudice 
tho business, or persistent breach of the agree- 
ment, or such other conduct as makes it'^not 

{a) .SoctiDii 32 (fi), (Ij). 

(x) Section 33 (1). 

(//) Secli.m 33 (2). Under 8. 23 of tho Act, a iiidi/ment <r«lit,.r f 
any partner n.ay obtain from tho court an „r,ier ihS^tl c sh'lr'e o 
the partner in the partnership property with the navm. nt r!i f . . i 
and may ol>tain the appointL'nt ^of a'i.^^V^cr" Ah'arpLrtne^^^^^ 
of prot,. and other n,oney« coming to him in respect of S pa.tnt^ 

Sis 'rs.^ cTuy'T I'Tittf 'rh -"'''''' ^^^^ 

against any parVnersi.; iyU\Z' ol' :^Z.tZ^LtZ 
hnn ; henee the necessity for this procodura "gamst the 

(i) Sccliuu 3i. 

(a) Section;!-, (a). (/-) Seeti,,,, 3o (h) 




r«a.suaul>l\ |)m«tit-al»lc fui t|i« other niemhHrs 
to coiitiimt' in f)HrtncrHlii|) with him (c) ; 
W'lum th.' hiisiiifSH van only \w cumcd <m at a 

loH.s {(I) ; 

(v) Whonevor th« cMirt thinl<H it an»l eqnitablo 
to tlwree dissoliitiixi (r). 
Iti the caaes of perttiancnt in.apacity, niisfon.liict 
.iM.i persistent breach of agreement, a partnership 
<!inn..t 1).- (««l ..n the application of the partner 
who is in fault, but a partnership may he dissolved on 
iM'liaU' of a partner who is a lunatic by inquisition or 
of permanently unsound mind, as well an at the instance 
of the other members. 

Administration of Partnership Estatk. 

The following rules apply to the administiation of 
t he estates of bankrupt and insolvent partners. The 
l)urtnership property is termed the joint estaW, and 
the separate properties of the individual partners the 
s'parate estates. 

The rule is that joint estate is appli.-d in payment of 
t\w debts of the partnership, and separate estate in 
payment of the individual debts of the partner to 
vvhont it bclon-s ; if in either case any surplus remains 
the surplus of a separate estate will be transferred to 
the jomt estate, if that i.s deficient ; the joint estate 
surplus being dealt with as part of the respective 
separate estates in proportion to the and interest 
<'f each partner in the joint estate (/). Thus A. and B. 
are partners ; A. owes his separate creditors £100, and 

•■■) Section 35 (c), (d). 

('/) Scftion :?r( (o). 

(f) Sec Hanknij)t( V Ad. I!tl4 

33 (fi). 

(e) Section 35 (f). 


n i r 

1 ! 




Ins separate cstato is £75. > ..wes £1.50, and Las 
£175 ; the firm's debts are £51)0, and assets £450. The 
separate creditors of .V. take the £75, those of B. take 
£150 of the £175. the joint creditors taking tlie remain- 
ing £25. Ajiain. if A. and B. are partners, and A. is 
insolvent. B. bein^^ .solvent, the joint creditors will 
recover the full amount from B.. B. bein- then allowed 
to prove against A.'s estate to the amount which he 
has paid beyond his proportion. 

Similar principles hold in the administration of the 
estate of a deceased partner in the Chancery Division. 

This rule, which has been much criticised, is firmlv 
established. Thus, in Ex parte Morley (g), James, L.j'., 
says, " if there be two estates, a joint estate and separate 
estate, the court takes care that the joint a.ssets are 
applied m payment of the debts of the joint creditors, 
before any part of them goes to the separate creditors " • 
and in Lacey v. Hill (h), he says, " as a -eneral rule, a 
separate estate cannot prove against a joint estate, and 
a jomt estate cannot prove against a separate estate, 
till the creditors of the respective estates sought to be 
proved against are satisfied." So, in Rolfe v. Flower 
<& Co. (^■), Lord Chelmsford, in delivering the jud<-ment 
of the Privj' Council, said " Upon a joint bankruptcy 
()r msolvency the joint estate is the fund primarily 
liable, and ... the separate estate is only brought in, 
in case of a surplus remaining after the separate creditors 
have been .satisfied out of it." 

But the law here, as elsewhere, recognises exceptions 
when there has been fraud. Thus, when a partner has 
fraudulently, and without the consent of the others, 

(</) (1873). L. R. 8 Ch. 102tJ, 1032. 
(A) (l^-.73), L. R.SCh. 441,444. 
(') (18»iti). L. R. 1 p. V. 27,48 


cnuveit.xl, i.ropoity U, his <)v^n um^ the 
joint estate .nay prove ayaiust that partners sepaiate 
estate, eveii though it is not shown that the separate 
estate has benefited hy the conversir.n (/!•). As regards 
the fraudulent conversion, " it is not neces^ar^• for the 
jnint estate to prove more than . . . that this over- was for private purposes, and the 
knowledge, consent, privity, or subsequent approbation 
nt the other partners. 11 that is shown, it is prima 
lacie a fraudulent appropriation within the rule " (/). 
And sucli consent or knowledge must have been real 
not constructive, for it is the better opinion that the' 
ib^ctrme of constructive n<.tice is not applicable 
here (m). 

On similar principles it has been decided that a 
creditm' of the firm whose debt was incurred by the 
f.erpetrati of a fraud by the partners, or any of them 
•'.ay prove his debt at his election against either the 
joint estate or the separate estates of the fraudulent 
partners («). 

And if there be no joint estate and no solvent partner 
who can be sued, the joint creditors may prove against 
the sei)arate estates on an eipial footing with the 
separate creditors (o). 

Partners may not compete in an administration with 
the hrm-s creditors, either against the joint or against 
dny of the separate estates, unless tlie separate pr(?pertv 
of a partner has been converted to the use of the firm', 

(/.) Sec liuid V. naitt!/ (1616), A App. l'd>,. 'J4. 

(1) .»t.',siiL, MM., in Lftcty V. //,// (1877). 4 Cli. J) ni.i 




l\ ; 


■ i 





nr vici! v(!i,sii, iiiul iml(!ss lliis (•( has t;ikc,ii place 

A creditor ot tlie lirm wlu. holds a sccuritv lor th»! 
debt ou t\u'. separate property of a partner may prnvo 
ii.irainst thti joint estate and retain his security a^'airist 
the separate estate, provided he does not receive in the 
whole more tlian the full amount of his debt. And a 
separate eieditor of a partncM- holding a security (.n the 
joint property is in a corresponding' positi<m. The 
reason of the above lulc is that the surrender of the 
security would not auj^ment the estate aj^ainst which 
proof was beiuL; made (p). 


I'he nature of goodwill is so intimately connected 
with the law of partnership, and (piestions concernin;; 
it aiise so frequently in partnership matters, that it 
may be V(My properlv discussed in this place. 

The term is one which is seldom misunderstood, 
but it is not easy to ^ivo a definition of it. L(ud 
.AlACNAciHTKN. in Trcgo v. //»></, (q). says : " What 
' -goodwill ' means must d(!pend on the nature and 
character of the business to which it is attached. 
Generally speakin^^ it means much more than what 
Lord Eldon took it to mean in the particidar case 
actually bef«.re him of CruUvell v. Lije. [r). where he 
says : ' The goodwill which has b(>en the subject of 
sale is nothinj^ more than the probabilitv that the 
old customers will resort to the old place/ Often it 

(/•) //( re Turiitr {ISX2), liM'h. JD. lo,->. 

(7) I lmi]\. v.. .a |.f.. 1';}. 24. .Sce alsu iKr \Vauui.n,ii.,n, .1,. i,i 

(1) (1810), 17 Vcs. :{4»i. 


I 'J.J 

1^ l.u«me«s, w,M.out which th. wo.,|,l vi.1.1 

t -rnolnut itisthcwhoh..,vanU.,.,whut..^^^ 
' ".a^ b., ot th« roputatioK H.ul c.»n„.cti„n ul' tiu- 

^^olk or ua.ued by lavish exponcliture ..1 ,non,-v ' 

In forms of business, tlie Goodwill is personal (.s) 
r.y., .uade by the skill of the person owninjf it ■ whilst 
■a others the goodwill attaches itself rather' ttl 
I-porty han to the owner's person, ..,., the goodwill 
•|t a well-situated public-house (t). Sonu, businesses 
. e .cud so entirely upon personal skill and udluonce, 
'lu.t .goodwill of them can with difficultv exist . ., • 
solK-.tors business (.). A personal .....dwiil is '..^M. 
•• .Husler, and so is the other kind, and this latter 
attaches itseli to the property, and may .o with it co 
to a mortgagee (x). ' ' ''^'' 

l^h. question which has given the greatest trouble 
tn the courts is to what extent the assignor of the 
^-odwdl IS bound not to enter into con.petition with the 
•• d fartn In Churton v. Dotujhs iy), it was said that 
the vendor could carry on the same class of with the same customers, pr..vide<l that he did 
not represent to them that his was the old business 
•..that he had succeeded to that old business; but iii' 
Lohouc/^re y Dawson (.), it was decided that upon the 
sale of a goodwill, the vendor must n.)t solicit the oKl 

('<) Cooper vMetropolilav Board of Wo.i; (1884), -3 CI, J; 47> 

(0 hx jHirle Funnelt (1881), 16 Ch. 1) 220 

(") Aitsten V. Bwja (1858). 27 L .1 Ch 7ia. . > „ 

^><'i,iflt.\lH<M)\l ('h -Alii "' ""'**' *«/"«. (/. In re 

(.'/) (1859), Johiu. 174. 
'•) (l.-^TJ) L. It. |:{ K.j. ;]22. 





' ! 

ruistoiiiors fii (case dcaliiiLi with (Im! piiirliasor ; altlinu^ih 
lie. iiia.v <lt'al with sikIi poisiiiis it thi'N come t»t liim 
unsolicited {<(). 

The jHOKciit state ol the law may he 8umm(!cl up 
thus (b) : 

(a) Tlu^ perwui wli'- acijuires the ^iiMxlwiil alone mav 
iei)reseut himsell as contiiiuinji or succeocliu"' 
tit the busiiies,. of the vendor. 
(h) iiut the a,ssi<inor may nevertheless cany on a 
similar business in competition with the pui- 
chaser, thouyh not under a nanui which W(»uld 
amount to a repiesentatiou that he was cariv- 
inu on the old business, 
(c) The assignor may piiblicly advertise his business, 
Itut he may not personally or by ciicular 
sohcit the customers of the former firm (r) ; 
and although he may deal with custonuMs of 
the. old firm, he nnist not solicif, those who 
come to hitn of their own accord (d). 
The way in which th(! ;.ioodwill should be dealt 
with on the dissolution of a firm has already been 
mentioned (c). 

Limited Pai!t.\ki!shii's. 

After January fst, fUOS. it became lawful to furiu 
limited partnerships under the Limited I'artuei ships 

('<) h'jyoll V. BiiiKll (IS.SU). I.") t'h. I). :J(M). 

(/)) Tiiijo \. Uitiil, I Is'.MiJ A. <'. 7. 

(<■■) The iiil(-ii;;aiiist t ho .solicitation of ol(i ciLstoiuei-.s lioc^ iinl ii(i)iiv 
to iil\ iiivolinilai'N iilioiialioii, '.;/., to the hale of a iK;r.siiii'.s Iiiivimo.s \i\- 
\\]-< triiNtrr in liankni|iti y (It »(//(/ v. Mollnim. {\y'S2), l!t ' h l> :(.")">), 
or l>v lljc tiu^it(-r iitnlcr a liecil of assigntucnt for the LH'n:-til of 
iu.iitol>t'.'»tc// tt' S,,„.--. I.l'l. V. jt/o»/t,v, |l!tl l| I Cli. .vy). 

J./) r.,rl lU^'Ui--^. L-mrlf,i v. nW^lu, [IWl] 1 Vh. tiS'i. 

to A Ilk, i>. IS.'. 

LiMiTKD Partnerships. 



Act, 1907. Such 

paituership must not coasist (»f 
( thau ten persons in the case of a banking firm, 
"f •>!' more than twenty persons in any other' case.' 
It nuist consist of one or more gemral partners, liable 
tor all the debts and obligations of the firm and one 
or more limited partners, who shall at the time of 
enteinig into partnership contribute a sum as capital, 
or property valued at a stated amount. A limited 
partner is not liable for debts beyond the amount so 
contributed, but he nmst not during the continuance 
"I the partnership, either directly or indirectly, draw or receive back any part of his contribution, and 
it h»^ so he will be liable for the debts of the fi,,n 
lip to the amount so drawn out oi' received back. A 
l.<>.ly corporate may be a limited partner {f). Unless 
;' limited partner.ship is registered, every limited partner 
Will be liable as a general partner (^). A limited 
partner must not take any part in the management of 
the busmess, and he cannot bind the firm, but he may 
inspect the books, examine into the state and prospects 
"I. the business, and advise with the partners thereon 
It a limited partner does take part in the manaaement 
-.1 the business he will be liable as a general partner 
to.' debts incurred while he so i^akes part in the manage- 
ment The death or bankruptcy of a limited partner 
does nut dissolve the partnership, and the lunacy of 
ii. limited partner is only a ground for dissolution if 
Ills share cannot be otherwise ascertained and realised 
On dissolution the right to wind up the affairs of the 
partnership is vested in the general partners, unless 
the (uurt otherwise orders (A). The law as to priyate 

(7) .Sfction 4. 

(/') Srrtion (J. 

(</) Section 5. 


I*\iri VFRSHIP. 


f ' 

piiitiKTsliips appli.H where it is imf, inronsi.stont with 
t\\^ provisions of Uio \vili). 

Oil lo-istration piiiticiilars riniat be furnished con- 
taining the Hnn name; the general nature of the 
business; the principal place of business; the full 
name of each partner ; the term, if any, for which the 
partnership is entered into, and the date of its com- 
Miencenient : a statement that the partnership is limited, 
and the de,-cription of everv hmited partner as such ; 
the sum contributed by eacii limited partner, and' 
\vhetJier paid in cash or lu.w otherwise (A:). Changes 
in anv of tlie above matters must bo registered from 
time to time(/). Any arrangement under which a 
-eneral partnei' becomes a limited partner, or a limited 
paitner- assigns his share to another person, must be 
advertised in the London, Edinburgh, or Dublin 
(lazette. before it becomes effective (w^). The .state- 
Micnts made umler the Act are filed by the legistrar. 
and are open to the inspection of any person on payment 
of a small tee (n). 

Subject to certain modifications, limited partnerships 
may be made bankrnpt in the same way as ordinary 
partnerships, and if all the general partners are aci- 
jiidged bankrupt the assets of the firm vest in the 
trustee (o). 

(0 St'ctidii 7. 
(/) Spctiiiii S, 
In) Secfion^ III, It;. 

(/) Section !». 
(tn) .Sf'ftioii 10. 
') Hanl<rii|.t<^v Ait, I!(I4. s Il'7. 

( i'>o ) 


Til.' C.mpanias (("(.nsolidation) Art 1908. ronaoli- 
'lut.-.l t\u^ previous statutes relatin- to li,nito,l coru- 
I'i'nies, aud the sections referred to throughout the 
|<|«^sent chapter are. unh'ss otherwise stated, sections 
of tliat Act. 

It is proposed to deal with a company— 

(a) .Vs a jj;oin!; concern. 

(h) fa liquidation. 


The Formation of a Company. 

A partnership cannot consist of than twentv 

P*^>N..ns, or, in the case of a bankino business, of more 

1hn]i ten pers,ms; beyond this number it must bo 

i.'-.stered as a company (a). Only seven persons are 

I' '.''•' ^" f'^"" ^ (company (or in the ca-se of a 

• private " company under the Act, two persons). V 
cumpany can be formed, havinjr the liabilitv of meml)ers 
limited to the amount of their share,s. or limited to such 
■•XMiowiit as the members undertake t(» j^Miarantee in the 
f^vent of the company l)eing wound up ; or with no 
limit on their liability. 

These are called respectively a company " limited 
l>y shares." a company " limited l)y ^jrimrantee.'- an.l an 
" unlimited " company, hi the present chapter it is 
'•nly proposcil to deal with companies limited i,v 

(il) Serf ion I, 

U I 


1 1 - 

■ i !■ 




Lnt US suppos.' tliaf sevfMi pt'rson.s have docide.! to 
I'T.u su.l, a coi.ipany. TIm- ..hjert has heoii ahrady 
■Yreed. It rornains to settle the uanie of the companv. 
the plare where the business is to be carried on. the 
amount of each share, and the amount of funds necessary 
to carry on the business. The points are embodied in 
a document known as the '• Menu.randum of A.ssocia- 
tion.' which is si-ned by the seven persons, who .nust 
agree to take one or more shares in the companv (b) 
This document is then taken to the Registrar of Com- 
panies at Somerset House, where a fee is paid. The 
reir.strar enters the new company on the reoister. 
-runts a certificate of incorporation, and the companv 
is coinph^te. 

The certificate of incorporation is conchisive evidence 
thi.t all the re.juirements of the Act as to reiristration 
and matters " precedent ami incidental thereto "' ha\e 
been complied with, and that the association is a companv 
authorised to be re^i.stered and dulv re-uistere,! under 
the Act (r). 

(i) The Memorandum o! Association. 

There are six e.s.sential in the memorandum 
of a.ssociation, a.s follows (d) : 

The .\o,He.~~Any name may be chosen, so huiy as 

It does not re.senible the name of some other linn or 

company (^). The last word of the name must be 

•' limited '■ (/). A cc.mpany -i.ay change its name by 

(/>) Section 3. 
(<:) Section 17 (1). 

,.h*'UYT''' '" '^'^ "'"'■ "' """l'""''^'' ^"""'■•' •-' promote art, .., i.,ue, 
'■ (/) Section 2.'>N. 


^P-iul ...sclntion witl. tho ,on.s.nt of the Board of 
Trade (,v); but .1 it has inudvertentlv re^isteml a 
nan»e ,s„u,lar to that of an existing ' rompanv. the 
• ousent of the registrar is siiffirietit. 

n^ %/./..../ O^V.._The ..ompany must have a 
MV...S ered offu.e. and the niemorandun. must state 
whoth.M the otiic-e is in En.lan.l, Scotlaml or Ireland 
llHM.' the register of members must be kept (/^ and 
ii"turs un the companv must be served {/), 

n^Objerl..of,he(%,u,iHrn!i.JV\., n.en.orandun. nmst 
.' tate the • ol,jerts - uf the companv. and with the 
"X.f'ption of powers '-fairly in.idental- thereto the 
••"•nipany eanuot act outside those objects (/!•) The 
I'owers ol the company ouj^ht not to be specified 
in the memorandum but in the Articles. Once how- 
ever, that the memorandun. has been rejri.stered the 
<'M.rt has no power to interfere, and can only construe 
I.e memorandum as it stands and accordin- to its 
''J"';^! ""^anin, (/). If the sub.stratum or .nai^ ol>ject 
-.1 tbo .on^any is .one, the con.pany n.ust be woun.l 
"I' ('"). There ,s no limit, to the objects for whi.h a 
"-mpany n.av be for.ned ex.-ept that thev must not 
•" -lb"4al The con.pany n.uv alter its men.orandun, 
bv specud res.,lution confirmed bv the court so ns t.. 
enable it (/()— > • . . i.. 

((/) Sfctioa 8 (3). 

-fSaSundl'v- tif': '■'^'•''"' ""^^'•^ '"^^'"^^ ''V n^e,nl.... f^,, 
'lyiiarg. ^rul hy ..tlicis on payuu-iit of one shillin.. 
(') ^^(><'tion 112. ■'■ 

(/) Cotnam v. Brougham, fi!M8j .\. ( : .,14 

(w) Re Amalgumatid Si/„iliaUe, I I8!I7 I 2 rh iKhi 

('*) yi-'ction !t. 


Mi M 



f r 


(;i) lu .aiiv nil its iMisiiH'sH iii))n> ('conoiiiiiullv or 

t'liicit'iif 'y ; or 
(l») in ill tain its iiiiiiii by ii»nv cr improved 

iiicuns ; III' 

(>■) to .'nliiiL;.- or cIiuiil;.' flic |,,cal uiva of its ojmmii- 

tions ; or 
(<i) fo <{iiTy on HOMi(> other Imsincss wliicli mav ho 

(•<)Uveni«^Mtly romhincd with its own ; or 
{•') (o lostrict or uhundo!! jiiiy of its objects. 

Limihd Liubiliti/. The members' liability may be 
limited by shares or by jiiiarantee (s»^e anlc, p. l!l!»). In 
eitlier case the fact must be stated in the memorandum, 
but a bare statement that the liability is " limited " is 
taken to mean " limited by shares." 

T/i<- Share Capital. ~~Thk clause must state the 
share caiiital with which the company proposes to be 
leiiistered. and the number and amount of the shares. 
Afoney l)ori(.\vcd by means of debentures is not part 
of the company's caj)ital. A preference ^riveu to one 
class of shares is sometimes stated in the memorandum 
lor the protection of the jireferrcd shareluilders, Imt 
this is not essential. 

T/tc Assuciution Clause. This is found at the end of 
tiie memorandum. It iiins : " We . . . are desirous 
of beinu fornuul into a company . . . and a>,nee to 
take the number of shares opposite our names." Then 
follow the iiumes. address.'s and descriptions of the 
seven subscrib.Ms, aiid the number of shares taken bv 
each of them. Each must take at least one share. 
Anyone may subscribe whether married woman infant 
or loieii^ner. 

Formation of a ToMrAXY. 




n • 

The soviMi sii-imhiios riiuat l.o iittcsted l.v at loasf 
-II.' witiioHs. The (luti.'S <.f th.' suhscrihers uir : 
(I) To |)jiy for Mieir sli.iras. 
(•-'} To si^ii the articles of as-sociation, 
i'i) To appoint the first (lirwitors, 
(1) Unless the articles proviii." otherwise to art as 
the first (lirwtors until muh app<.intinent. 

(ii) Artities of Association. 
While the Monioraiuium defines the powers of the 
n.iiipanv in its dealinj,'s with th;i outer world, the 
Articles are the re^iulations which govern the relations 
of the company and the tnenihers ittfer s<- ; they deal 
with the internal administration of the company. The 
same persons who signed the memorandum of associa- 
tion must .-^inn the articles in the presence of a witness : 
the articles must be i)rinted and stamped as a deed. 
Ill tlie case nf both memoranchim and articles the 
«oinpa!iy and the members are boimd t(» the same 
extent as if they had been si<rned and sealed by each 
Mieinber. and contained covenants by each men .er 
to observe tliera (o) : and any alteration therein, if 
properly made, is equally bindiry {p). 

It is not essential for articles of association to be 
ivgistered. If no articles are registered, the regulations 
ill Table A in the First Schedule to the Companies Act 
form the company's articles of association. The reg- 
lations of Table A apply in the case of a company 
whose articles are registered only in so far as the 
regulations in Table A are not excluded {q). 
The articles are subject to the memorandum. iin<l the 

<>) Section 14. 

(p) Section 13. 

(9) Sec-tiuii II 




p'<\v.'f fo alter tli.> aitirles riiliMot l,o „se,l hv the 
••«'iM|Kinv to alt.T in fh,. UHMnuiaiulm,, (r). 
For |)iir|.(.s..s of ronstriHtioi,. how^'ver. tl.o nu'rnoian- 
'liitn iiii.l iirtiiK's ai.' to be mwl to-.!M„.|. as t|„' on.' 
mav fxpliiin tlie otli»'i (s). 

Altemnou of the Artick^.-X companv mav alter its 
aiticles bv special resolution (/). Any alteration n.i.v 
l<e made which does not jr,, outside the powers of the 
lueniorandum (*i). .,r deal unfairlv with the ri-hts of 
the niinority (,r). In the latter ciuse. however, if the 
alteration is made bona tide for the benelit of the 
eorapany as a whole, it will be allowed (7). 

Articles restricting,' foreign interests in a conipany 
cannot be altered e.xcept with the consent of the Board 
of Tra<ie (:). 

Registration of Meinonnidu,,, m,d Articles —This is 
Elected with the Keyistrar of ('on.panies at Anyone may inspect the memoran.lum and 
articles on payment of a .shillinir. but onlv members of 
the compatu- are entitled to have a copv. I'c^rsons 
<l''i'lmv with the c..mpany are deemed to j.ave notice 
ol their contents, and act accordin-dv • but thev 
are onlv bound to see that the piopo.sed .bnilii,.. is not 
in.-onsi.stent with the memorandum ami articles • thev 
need n..t inquire whether all the nece.s.sary steps have 

iJlit'L^, £:''"'"" ''""""" ""' ''"" ^'- - ^'"'■'" CHT^). 

{^) J.o,^l0H Financial A s.,^., II Ion v. AV//it (1884), 2.1 Cl, |) ur 
U)i^^i:Uox^ \-i. A.s to .special resolut.on. .sc^e p<>./ ,, •>■'■' ' 

« Andnu's V W... M,l,r Co., f 18971 1 Ch. :Hil ' 
U Brown y,. UntisI, Abrasive Whtd to. iWH^WV V -4 

(;) ( i>in)iamf- il-'oivimi Inf.'re.sts) .A. t, 1917. 



'••••••. lakni l.v the rnn.panv it.sril to „.ukf tl.c ,,rn- 

(iii) The Prospectus. 

This is iisiuilly siniinl hy a p.'i.s.„i wh.. is ,aMo,| fh»! 
■■ |'ruin.,t..,." The tftni is not (Minnl in the \(f |„it 
rorKm'RN. C.l.. ,h.Hno,l a {.....n.-ter as - „ne who 
lUKh'itak.'s tr. f„n„ a c.rnpanv witli ir|..|(.,i.e t„ a 
■Jiv.-i, project aii.l to set it uoiiiu a,„l ^ho takes the 
iie.evsarv steps to,„plish that purpose " (/,). I,, 
issumu the piospe,tus the promoter must take rare j,ot 
to make any untrue statements, otherwise- 

(I) An allotm.-nl of shares may he set aside ..n the 

•ground of misrepresentation ; 
(-') lie may have to pay (himaues (a) for fraud (r), 
iiiul (1>) for statements which h.r helieved to' 
hi' true without reusonahU^ «rouml for such 
belief (d). 

The promoter must also disclose all matters in the 
prospectus re.piired to he disclosed l,y the Companies 
(<'..nsohdation) Act, 1908(c). Every prospectus nn,«t 
l»e <lated, a c(,py must be si-ned hy everv director and 
iiled with the rogistiar ; every prospectus nmst state 
that a copy has been so filed. 

The prospectus must state— 

(H) The contents of the memorandum, and tlu; num- 
ber of " f(.unders' " or deferred shares, if any ; 

(b) The number of shares (if any) H.xed bv the 
articles a,s the qualification (»f a dnettor, and 

(") ly'.'I'lUirihs/i Bonk V. T>i,(iii,nnl {\t^:,i,\,\ i: .y^ |. {..7 

(•/) SlTt 

(<-) ."^I'l-lion 81 

'"'// (iS77), L'C. 1'. I)., ui 
!i V. /'(fX (iss-t,, 14 xj.p ,•,,, .J3- 

•11 M. Ntc atiU, pp. 10}, 105. 

I'p. 'JO U ^cij. 





tilt' niiiiiuiciation of the diroctms as Hx<'il hy 
the Hiticlcis ; 
(<■) The names, (i.',sciipti(>ii,s. and addresses of tlie 
directors ; 

(d) The niininiiim suhs< ription on wliidi the liicctois 

may proceed t<i HMotnient ; 
(^') The nund)er nf shares or dehcntures issued as 

lidly or purMy paid up otherwise than for 

cash ; 

(./) The names and addresses of the vendors and the 

amount payable to each : 
(u) TJie amount of the purchase nionev specif xinj: 

the amount payabh- for ;;ood\vill : 
(h) The amount of umlerwritin- commission, if aux ; 
(i) The amount of prehminary expenses; 
(j) Tlie amount paid to any promoter and tlie 

• onsideration thtsrcifor ; 
(l<) The date of and parties to every material cf.n- 

tract and a reasonabh^ time and place where 

the contract or a coj)y then^d may be 

inspected (/") ; 

(I) The nuuu's and ii,|.lress.vs of the (if 
any) ; 

(m) The interest of .-very dir.-ctor in the promotion 
of, or in the j,roperty to be acquired by. the 
•ompany, an.l the sums (.aid him t(. induce 
him to become a director ; 

(n) Where (he sha^^s are of more than on.. ,.lass. 
the ri-ht of v„tin,u .onfrrred by the several 
chisse^s <»f shares. 

(/) Tlir ,,mi,,anv camiol tuutiart Ix-tor,- i( c,.i.„ . int„ oxisk-n.o 
. wn l.v m...n,s „f a„ a^ent ^K,ln,:r r. li,u,,r (IS.Wi,, I? |: ^ ,■" .' 
- ). U ....,„„|„ ,„ .,,u.r into sud. an aK..<.nM.Mt. it n.u.stalwa . 
"""""' '•> "'"•" '"""-• "f'"-<'"i'Hor,,orati,.nof thfc„m,,an • 

Formation ov a (Jompanv. 


.Smiie ". the^e partic^ulars are excused where the 
l>r(i,si)ecL is not issued until a year after the company 
is entith > commence busiues.s. Where no prospectus 
is issued the company must Hie with the registrar a 
'■ statement in lieu of prospectus '" cfrntaining most of 
the informati«)n which would he required in the 
pinspectus (g). A person who applies for shares on the 
laith of a fded statement has the same right of rescission 
as he would have had if he had relied on a prospectus, 
hut an inaccurate or insufficient statement is not a 
nullity rendering the aUotment of shares under it void (//). 

fhulerwrUimj.—BeUne issuing shares, companies fre- 
ipicntly agree to pay commissif)n to any person agreeing 
to subscribe or procuring subscriptions for shares. 
These are knf)wn as imderwriting agreements. Su(;h 
payments are only allowed if the anu.unt oi' rate is 
authorised b\ the articles and if the authorised amount 
or rate is not exceeded. In tlu; case of a public company 
the amount or rate nmst be disclosed in the prospectus 
or statement in lieu thereof, and in the case of a private 
company it nmst be shown in a statement in similar 
form filed with the Registrar (i). Any other payment 
l»y way of comjnissi<m or di.scount is illegal, but this 
will not prevent a company from paying the usual 
• brokerage " for a brokers siMviccs. 

I^'nreiffn (W/>antf'A'.— Companies formerly sought to 
•vade thase provisions as to disclosure of particulars bv 
b.'ing registered outside the United Kingdom. Now, 

(!/) ^>ecti(JU 82. 

(/') AV BhiirOiti ,1 lliniik Farmice ' ',,., /,/,/., ||!)14J I Ch K'HI 



(oMfANIKS.,s w.tiuu the Un.ted Kin,cl.„n, wi/hin .uu- 
mon h ot ,so do.n,, file with the ,e,i.t,ar a c-opy of its 
HrtK-los and memorandum, a of its directo s. and 
^- u.,He an,I address of son.e person in the United 
K.u,don, who will accept «ervi,.e on behalf of the 

Ui -in)) ami e.xh.bit on .ts premises as well as on its 
.•orrespondence and offidal publications the name of 
the ...nntry where the ...npany was incorporate! (/•) 
A company uu.orporated in a British possession 'if 
--P1.0S w,H H,ese re.p.iren.ents, his power t 
I'old lan.l m tins .o,.ntrv as if it were an En-dish 
company (/). •^-"■^usn 

Shareholders and Shares. 

Persons may becr.nie members („i)-^ 
00 Kv sijinim; the memorandnm of association ; 
(»» «v allotn.ent. or by taking a transfer of shares 
in»m a member (n). 

CV'n/^. ..Anyone ean a n.ember. ., 
■inother con.pany. a n.arried woman, or an infant • but 

.a mant has the ri,ht to repudiate the shares 
- ^'^ "'nu full a,e (o). A shareholder must pav the 

who ;mmnnalam,mnt of his shares in cash. Mother 
u uds. the company canm.t issue shares at a discount. nuiv be issued in return for services. If this is 

(/) Section L'7."». 
(w) Srotion 24 (I). 
'") /'"'/.. .suh H. (2). 

''''^, P|). ;i;{, .■!(.;;s. •"'/'/« c, [\h<JA\ ., (I,, .ift., ;,^.p 

Shareholders and Shares. 

■J< •".> 

tloiK', tli(5 ( itiiipauy must file with the rcuistrar a contract 
ill writin;,' showing the consideration for the allotment, 
;nid the number and amount of the .shares allotted (p). 

If shares are held on trust, the trustee's name is 
<'utered on the register, and the company need take no 
notice of the trust (7). 

On the death of a shareholder iiis executor is not 
|HMsonally liable to pay calls, unless he applies to be 
put on the register ; he is then entitled to an indemnity 
Intm the estate. 

The articles usually contain provisions regulating the 
voting power of members. During a state of war an 
alien enemy cannot vote in respect of shares held b\- 
iiim in an English companv (/•). 

Annual Siimmary (,s).- Every year the company must 
s<'ud to the registrar a list of its members and " the 
annual summary," which nuist contain the following 
particulars — 

(1) The amount of the share capital and the number 

of shares ; 

(2) The number of shares taken since the commence- 

ment of the company ; 
{•i) The amount called up on each share ; 
(f) The amcnmt of calks received and uni)aid, and 

shares forfeited ; 
{■)) The amount paid by way of commission in 

rcspocf of shares and debentures since the 

last return ; 

W) SCLlloci Sh (1) (I)). 
(7) Sf'oliim 27. 

(() /l^»/).^()/( V. I'll inn I Oil 1111(1 1'ipi 1,1,1, r,) . [i',)i.>| 2 ell. iji. 

(v) Srctiiiii •>{,. TliK> .st.ili-iiRii! iiiu.,l Iji; .,tiit in wjtlirii tweutv-om; 
'l.i.\i> altci- the "oin'ial incttiii:.. 







i'}) Tho „umlHT ol shar.. wanants, and the nuinl.or 

'•I sliHit!s comprised in flioni ; 
(7) A list of the (lirortors tcyother with full paiti.nlar.s 
as tc. name, nationality, private ad(lres.s and 
any other husincss occiijiation (/) ; 
(■^) The amount. ,»f dehis due from tli.i eompanv in 

lospect of mort-aires and charne.s : 
(1» An au.lited balance sheet, showing the n.mpanv's 

••rtpital. liabilities, an<l assets. 
A share entitles the hold., to a proportion ol the 
l»n'hts ol the eompany. an,l of it,s eapital xvhen it is 
wound up. 

.ino,nu'nf.--Su shares ai<. to be allotted until tin- 

'•'""mum sub. ription has been subscribed ami the sum' 
payabl.. on appli.atioM pai.l (.,). Th. nnninunu sub- 
-•-•rpt.on ,s [i.x..,l l.v „H. articles ami namcl in the 
Pn.spe.t.,s, ami the sun. pavable on ..ppli.ation n.ust 

"'/t'<; ■^I'a.vs. If the minimu.n subscri,>tion is m.t 
snbscrd,e.l within lortv ,lavs after the i,s.s„e „f the 
l>n.spe..tus. all nu.nev received fron. applicants for 
shares nmst be n.paid within ,lavs If „„ 
'">"'"'■"" subscip.i.n has beeu li.ved and named, then 
^'7 ^^■'.'•''V''''-'''^ -'•■ the share eapital oHere,! be 

lese pmvisions 

subs,rib,.,| beb.rv allotment 1^ ma-le. Tl 
■i^ I', a miuinmm subs.-r.ptiou -nlv apply (.rtJie'lns,^ 
^^"-•""''it-l shares ..Ifered to -he public fur snbserip- 
""" ■ '"" ^''•' -""""t Pa.vable on appli..ation nm't and Sharks. 


uovci be l«8.s than 5 por coiit. of the iioininul amount 
<'t the iihaios. 

Shore Certificate (./ ). -Tlie citnipanv kme to 
the shareholders a share certificate within two mouths 
alter aHotment or the registration of a tiaiisfer. This 
i-nables the shareliolder at once to show a prima facie 
title to the shares included in it. 

Transfer. — Every sharehohier has a right to transfer 
his shares even if not fully paid provided that he trans- 
l<Ms them absolutely (y). But the dire<tors may be 
given a discretion to refuse a transfer witluuit assigning 
;i reason : this, however, is not allowed by the rules of 
llii". Stock Exchange. 

On the death of a shareholder, his shares vest in his 
jMMsonal representatives ; on his bankruptcy, in his 

For feilure. —The articles usuall\ uive the diiectors 
power to declare .shares forfeited if the shareholder 
does not pa\ call.^ upon them. The shares th<!n belonii 
to the company, and may be s«)hl for the best price 
obtaiuablc. Sometimes the directors are given jiower 
to accept the sun vndci of tin- sliar<!s. but this i,s only 
|i«Tmissilili' whcii' a loitriluic wouhl be justiticd (:). 

/'njrrener Sl„i,es. -The hohb'i of these shares is 
iisiuillv .■ntitl.MJ by the articles to a fixed divifb^nd 
i»cloie anv dividend is j)aid on the ordiuary share.s. If 

') S.-iaii>n ".>2. 
(7> /i'. Dt^ifinnT.i' Finanr, Vorimralion, l.inilliti'.-: Cn-sr, ll'tlU' 

. -) /;«//( //<// V. llvwUind and Mmn-mKCn Co., [1W2] 2 Cli. 14. 





' '»MI'ANIK.S. 

tlH- |Mde..u< ,. is MH-ant to ..xt.n.l ... ,„,,itHl as wdl as 
chvidead provision to that oftVct should U. made in th. 
articles o association. IVHorencc shanvs n.av he mado 
/■umuat,ve. and in that <.asc. a deHc-iency in tJ.o 
. .v.don( for one vear is np in suhseqnent vears. 
It the shares a,, non-cun.ulative. and the divid;nd is 
passed, ,t wdl not hemade „p in subsn,,„,.nt years. 

JHnrr, .r F,nn,d.r.^ Sknres. -These are nsuallv 

> -he promoters, and a dividend paid on then, 
'•"i 'f the d.vKlend on the ordinarv shares reaches a 
•CI •am ar/ioiinf . 

•<>"rk. \ sl.nes have been fnlly pai.l up. they 

'Ma.vUet,.rm.dn.tost.,ck. if the artichvs so provide; or 
s.oek n.Hv he reeonvcMted mto shares (a). Stock differs 
'-"-M shares m ,|.,t it „„, j„ „-,nsterred. split up 
';''';^''; ''^'''''••'^'l '^'-.i.nt. whereas a share cannot he 

Capital, Dividends and Debentures. 


"ip'fi'l of a company mav m^in (1) tlie 

'---1 -pital, .... the anmunt nan.ed in the n.einoran- 
''"" '' 'A««'K''''<«on; (■>) iss„e.l <apital; or (.' 

a*>Jtt I'll * 

cajt tl. 

(•5) paid-ii] 

">^- <apilal ,s im, eased when the auth..rised 

"al ol ,1... ..on.panv has been issued and more funds 

-• '-I'mod. .\ ,.,m,,,any n.ay alwavs in.wcase il.s 

:;;i''*^'' ^^f'"-;;- 1----' '-h. so is contained in the articles(/,) 

I l..-se usuallv provide that the companv mav do so i n 

general n.eet,n,, in which „.,.. an ordinarv' resolution 

") >p(.liiuM II — 1;{. 


f') .ScL-tiun 41 (I) („), 


is rtuffirient. Where capital is increaMetl the ineiuu- 
niiKliini must lie altered accordingly, and notice must 
be given to the registrar within fifteen days of the 
resolution authorisiim the increase (c). 

Reduction. —A company may reduce its capital " in 
any way " bv special resolution confirmed bv the court, 
il it is authorised to do so by its articles (d). This is 
often done to enable the company t(» pay dividends with 
safety when assets are lost, or to enable it to burrow 
fresh capital and increase the proportional interest of 
the new shareholders. The words " and reduced ' nuist 
be added to the name of the companv if the reduction 
involves a diminution of the company's assets (°). In 
two cases the leave of the <ourt is not required for the 
reduction, i.e. : 

(1) When the company desires to cancel shares 

unissued (/) : 

(2) When the company desires U) pav back capital 

out of accumulated profits with the rivlit to 

call it up again (g). 
Neither of these are regarded as '" reduction of capital " 
within the meaning of the Act. 

Dividends. —The mode of payment is determined bv 
the articles ; dividends are usually declared by the 
dire(^tors with the sanction of a general meeting. The 
uiost important rule as to their payuuuit is this : 
Dividends must not be paid out of capital. Loss (.r 
depreciation of capital nmst be charged returns 
before the amount of profit vim be ascertained and beftue 

If) Seiitioii 44. 
(J) tSection 4ti. 
(>-) St'cliou 48. 

(/■) .Section 41 (I). 
(<j) S.-ctiun 40. 



<livi.l..n(ls .-in* pai.l. Legally, liowovr. fliis is o.ilv 
•Mseritiul wlicm Mmt,! is a loss or dopivciation of ■• circii- 
liitin;,'" as opposwl to " lix.-.! " capital (A). On th.- 
othor liiiiul. any ap|)n'ciation in thft value of the fixed 
capital assists may be paid out as dividends, but the 
whole ac.curits for the year must be taken into con- 
siderati.m. A realised accretion to the estimated value 
of one item cannot l)e deenuid to be i)r(.fit divisible 
among the sharehold.Ms without reference to tho whole 
accounts fairly taken (/). 

Fannu'tit. of Intprcsl o„t of Cnpifal.- -TU\^ is allowed 
where shares are issued to defray the expenses of c. in- 
struct ion. etc.. upon .so much f.f the capital as is paid 
up. proviued that — 

(H Such payment is aiithorised by the articles, or 

special re.solutif)n : 
(J) Such payment is sarutioned bv the lioard ,,f 

Trade ; 

(••i) Payment must not .extend beyond the half-year 

ii«'xt after the half-year during which the 

works are completed ; 

(4) Till! rate of interest not exceed 4 per cent. ; 

(."•) The interest paid is not to operate as a reduction' 

of the amount {)aid up on the .shares ; 
{<'•) The accounts of the company must show the 
capital on which the interest has In-en 
(>aid (^j. 

(A) ■■(• ■ -ap.tal :, property acquirc.l an.i pr.„lu.o,l will, 
a V...W ., rP«.le or .sale at a prolit. " Fi.ved " ..apital is ......^ y 

proht (.see Huckl..y on Compani-s. !,tl. .4 p. .i.-.:». .a,,,! U.nL.a 

(I) /■W*'r V. Trnndthl, l.,m,U,l,\\^\\} | Cli '»0S 
(/.) SortioT) 'Jl. 

<'apital, Dividrnds and DRnRVTi'REs. 2iri 

Debentures. —\ «l«'l».intiire is an iiwtriiiiieut i.-isiiwl bv 
tlit^ companv providin-,' for the payment of a suiu of 
moiitiy with intftmst. It is usually urif of a serios, hut 
a sinuh) (h^hcuturft may ho issuivl. 

I )t'h(inture stock is tho sam« as a dflx^ntuiP. except 
that the, loans an? consolidated for convenience, and are 
sid)divisihle. A nu)rt<;a<,'o dehentute creates a char<,'e 
>>\\ property, and is usually secured hy a trust deed. 
A tlebenture may he made payable to hearer, and ho 
liecome a " ne^'otiahle " instrument. A re;;istered 
ilehenture is transferable upon the terms of the conditions 
of issue ; but a debenture to bearer i.s transferable by 
simple delivery. When a company char<^es its under- 
takiui.' and all its property present and future, this is 
said to be a " floatin;^ char;,'e." Its characteri.stics are : 
(!) It is a charjio on a class of assets present and 

Ci) which in the ordinary course of would 

he chanijin^ from time to time ; 
(■*») It is coatcfuplated that until .some steps are 
taken, the company shall carry on l)usiness 
iu the usual way (/). 

Hefjisiratinn.—The. followiny mortiraues or chari,'es 
Miust be reiiistered wit the Reyi-strar of ( 'ompanies (m) : 
{ I ) To secure any issue of debentures ; 
(2) On uncalled capital ; 
{'•i) An instrument which if madf by an individual 

would be a bill of sale ; 
(4) .\ Hoatinj.; char<ie ; 
(o) A mort^aye of laml or l)ook debts. 

'/) He Yorkshin WinA'^tiihir.^' Aasurinlion, |l!»0,1| 2 <'(i 'JS-4 
(.71) S,-t-tion sy.\. 




It Mm! i.-4i.^r.-ie.l witliiii tw.'iitv-une .lavs. tli« ul)».v«» 
an- v.,i.| ||„. Ii,,„i.iar.)r uimI .i.Hlitois. Tliv 
l«>ll..,vmu imitifuliirs miisr l».' yiv^m m rHuistcriiii; the 
• liiUM.': (1) TJu' aniourit -eciired : (2) Dates „| 
•n'iitKiu ; (.'J) D»'.>.ii|)ti„M of piopeitv i'hamod ; (4) 
NiMh.'s u| Mnst.vs (if anv) f..r M,,' dobontun'-lu.ldois (»). 
'I'll'' roinpaiiy inii>t :ils(. k.'«'p ccpios ul flics.' io<;isfoJV.| 
in..ituav,.s. aiul also a'i of all in..itua.i..-.s ufVoctiiin 
til.' c-.tinj)unv"s pi.i[M'rtv (o). 

A rioufin.. cliaiL!.' .Teat.'.! within thi.-.. inunths of th.. 
wHMlniii lip of a company, nnless it is prov.^l that th.- 
« ..uipaiiv was solv.-nt irninwliat.-ly aft.M' the cmitiou ..f 
•1<" H.a.-.'. is invalid, ...x.-pt t.. th.' .•xt.Mit ..f ., pai.l 
>'• lhH,„M.panv at ursiibse.pu'nfly to th.> (•n.ati..n of th<>, ami in .•'iation for it. with intei.'.st on that 
.iinoiint at '» per c.-nt. p«r aiiinini (/;). 

I>.'l...ntniv; ar.' not part ..f the .•ompanv's capital, 
und )li.-r.«for.s nnlikc shar.-.s. th.'v .an he i.s.sii.'.l at a 

R.„,„ln,, nf I),hn,t„n'-I.,,hl, r. -If f h.' con.panv niakvs 
d.'l;inlt, th.' lollowinn K'ni.'.lics are ..p.-n to the h..h|..r : 
(I) ll«' may aj) a r.'.viv.M- hinis.'lf, if th.- ...n- 

ditions of th.' d.'h.Mitnre allow him t.. ,|o so ; 
Ci) If.' may brinu an m-tion ou b.'half ..f himsolf an.l 
Mm^ oth.-r dch.'ntnre-holders. to ..hfain pa\- 
ment ..r .'iifor... hi.s s.-cnrity by sal.'. Th.' 
••<'nrt will th..n appoint a r.'ctiiv.'r. and (if 
•"•'••'■isary) a manager. „iitil .sale. The e.nirt, 
wdl sometimes the re.eiver t.. borrow 
"".n.'.v lor the .,f the • 

I'll .'Sei.tiiiii !i;{ (;t). 

I/-! S.-ftidtl iVl 

(«) Section KM). 



(■{) H« iiuiy apply for foiHtlosiin'. hut this is iiniisiiai ; 

(I) H«* may, as a cieditor. pM'st'nf a windiim-up 
potitiou (this ulso is unusual). 

Whore the ( (.inpanv is lu.t beinir w..uml up timl n 
ifceiver i- apjiointeil under debentures which constitute 
.1 tioatin-^ charu-e. the preferential d«'l)ts must he paid 
lorthwith and before the claims of the debenture- 
holders (q). 

A receiver and manager who pays away assets in the 
course of carrying on the company's business without 
piovitling for a preferential claim of which he has n.-ticc 
is liable in damages to the preferential creditor (r). 

When the company is being wound up and the free 
assets are insufficient to pay the preferential creditors, 
the debts due t(. them nuist be paid out of anv pn.pertv 
"•M, prised iu a Hoating charge in pri..ritv to "the claims 
<•! the delteiiture-holders (.s). 


I. Directors. 

The company's business is usually, th..ugh not neces- 
aiily, managed by directors. Their position is that 
"I (1) trustees {/), ami (2) agents lor the company. 

The lirat directors are usually named in the articles. 
Tins method of appointment is only valid if thev 
lijjve - 

(1) Signed and filed with the registrar a written 
consent to act ; 

(7) Section 107 ; see, pp. 237, l'.'<8. 

(/) Wondjty. WiiLskHl, [UilH] 2 VU. MKi 

( ") .Scttion 20!». 

(/) Alrnimlt, V. Aiitomiilit T^hphuu, ( \, , |l«MHi|2('|, .-.d. 






I 2.8 



[1 2.5 






■■"■ .' L J'i* Mur; Street 

■' . i-.f»srer, Ne* York '-^eoy ivSA 

"*- '•S.? - 0,^00 - Phone 

■••' .'88 - ^.■?89 - Fox 

21 s 


t>- I 

(2) SIliiumI t.lio niftinotanduMi lor i]mv ((ualitioatioii 
sliaras (if any), <ir a (■(•ntract to take tlieni 
from tilt' roinpauv and to pay for them («). 

If not Jianied in th« articles the first directors are 
appointed Uy the subscribers to the nieinorandura. The 
articles should provide as to the appointment of directors 
from time to time : such appointment is usually made or 
;it least confirmed by the company in general meetin<i. 
The company sho\dd keep a rei^ister <4 directors and 
notify the registrar of any changes in ihc directorate (x). 

If the articles (u»ntain provisions as to a director's 
(qualification shares, the amount nuist be disclosed in 
the prospectus {>/), and the director must take them up 
within two months of his appointment (z). The com- 
pany cannot commence business until every director 
lias taken them up and paid on them the amount 
payable (»n application and allotment (a). Directors 
are not entitled to any renuineiaticm apart from pio- 
vision in the articles or express agreement. A <lirector 
cannot make a contract with tlu^ company, unless he is 
expressly i^iven })o\ver to do so in the aiticles. The 
powers of the directors cease on the comuiencement. of 
a windiuu; up. 

n. Accounts and Auditors. 

AccAmnta. — Dire<;tors are required to keep proper 
accounts, i.e., the capital .account, which must bn 
included in the annual summary ; (2) a profit and 
loss account which must be laid before the companv in 
Ueneral iiieetinu (mce a. vear. The balance sheet to be 

( ii) .Spctriim 72. 
(.r) Spi'tion 7.">. 
[il\ Si'ition Hi. 

(:) .StM'tiiin 7-t. 
(</) Section H7. 

Management of Coaipany. 


iiirlii(]e<l in the " annual Miinunary " need not inclndo a 
statement of profit and loss (b), hut tani^ible and in- 
tani,'ible assets should not be included in one item, and 
lixed assets should not be lumped and valued together, 
where they are valued on different principles (c). 

Auditors. — Every company nuist, at each annual 
ueneral meeting, appoint auditors (d). No person other 
than a retiring auditor may be appointed at an annual 
'general meeting, unless fourteen days' notice of inten- 
tion to nominate ".;im has been given by a share- 

An auditor, if appointetl by the articles, or at the 
annual general meeting, is an '" officer " of the coni- 
])any, and as such may be liable in a winding up, 
together with the other officers, for damages for breach 
of trust {e). An auditor, informally appointed, is not 
so liable (f). The auditors have the right of access at 
nil tinies to tlie company's books, accounts and vouchers. 
and can require any information or explanation from 
the officers (17). Their duty is to examine these bt)oks 
and compare them with the statements on the balance 
slieet. Thev nnist then make a report to the share- 
holders which must state : — 

( 1 ) Whether or not they have obtained all the infor- 

mation and explanations they have required ; 

(2) Whether, in their opinion, the balance sheet is 

properly drawn up so as to exhibit a true and 

{h) Section 26 (3). 

(t) (MUfway v. Schill Seehohm .{• Co., [1912] 2 K. B. 'VA. 

((/) Section" 112. 

{e) H" Tjon'Jrm ami (ie»fral Haul.: [iSitr.l 2 Ch, 073 : and sfp s. 

(/) Ke Western Coinilies liabri*'." Co., [18071 1 <'li I'I7, 

(./) Section 113(1). 


:n i 2 



! ; 



correct view of tlie state of the companv's 
affaiis according to the best of their inforrna- 
tiou and the explanations given to them, and 
as shown by the books of the company {h). 

The balance sheet must be signed by two .directors, 
and the auditor's report must be attached thereto or 
referred to therein. The report must be reac' in 
general meeting, and be open to the inspection of any 

When it is sliown that audited balance sheets do not 
show the true financial condition of the company and 
that dauiage has resulted, the onus is on the auditors to 
prove that this is not the result of any breacli of duty 
on their pait (<). 

The shareholder, however, is not entitled to a copy 
of either report or balance sheet without paying for 
it (A). For a breach of these provisions (n-ery officer 
«tf the company, who is knowingly a party to the 
defaidt, is liable to a fine. The auditor must act 
hone.stly ant) take reasimable caie that what lie <-ertities 
is true. On the other hand, he is not bound to be 
suspicious where there are no circum.stances to excite 
s\ispicion (/). 

As to the. audited .statement in the form of a balance 
sheet to be sent by a company each year to the registrar, 
.see under " Annital S(tmmarv,' ante. pp. 2ni>, 2H>. 

Remuneration.— TU". remuneration of an auditor is 
fixed by the company in general meeting, but where 

(A) Section li:{ (2). 

(i) Hi Hepub'ic uf Boti.i,, Exulorulimi Si/ixliaile, l.uL. \ litUl I ( li 
(k) SecUoa li:{ (3). 
(/) ti,' Kinij^tini (\>tl,„i Mill |X„. 1'), I iHiiii) 1 t'li. ;»7i» 



tlic (liiiHtors employ an auditoi to till a ca^iual \aLaiRV 
tln'.y tail tix Ins rcimmeration {m). 

m. Meetings and Resolutions. 

Sfntutorij Meeting. — Every new (•om])aiiy must lioUl 
this meeting not more than three months from the date 
when the company is entitled to commence business (h). 
It is a general meeting of members, and seven days 
l)ef()rehand the directors must forward to each the 
" statutory report," stating : 

(1) The total number of shares allotted ; 

(2) The amount of cash received for such shaies ; 

(0) An abstract of receipts on capital account, showing 

those from shares and debentures and other 
sources, and of the payments made theieout ; 

(1) An account or estimate of preliminary expenses ; 
(j) The names, addresses and descriptions of directors, 

auditors (if any), manager (if any), ami secre- 
tary ; 
(♦;) Particulars of any contract proposed to be 

modified and oi proposed modification. 
Ii\ respect of (I), (2) and (3), the report must be 
cortilied as correct by the company's auditors. 

This report must be tiled. In default of filing the 
irport or holding the meeting, any shareholder may 
present a petition for winding up the company. 

(icneral Meeting.— k general meeting of members 
imist be held once a year, and not more than tiftecn 
months after the last general meeting (o). It default 
is made, the court may, on the applicatittn of any 
iiKMuber. order a uencrai meeting to be called. 

{Ill) t^ccUou IIJ. 

{^U) .ScLtlUll (>0. 

(d) htutiuu (4. 




K il)iiitr<liii''irii Mv(livi). On tin' i('i|iiisi(i(>ii of tlio 
lioldt'is o| nut less than niic-tciitli of tli«^ issufd sliaic 
t apiiiil, tlif (liicctors iimst call an extraordinary nicrtin^. 
Tli«' KMjiiisition must .statr i\w ohjocts of tlio nieotin^. 
If the. (Ill ('(tors n<iL;l»Ht to call the meeting; within 
t \vellt.y-on^ days, the loijuisitionists may call it thoni- 
sc'lvcs (;<). 

Resolutions. {\) An onlitiary resolution is passed 
l»v a majority of those present at a "general meetin;j; (7). 

(2) An extraordinary resolution is one passed hy a 
three-quarters majority of members present in person 
or by proxy at a jj;eneral meet in;; of which notic-e 
specifvin;; the intention to [)ass the resolution as an 
extraordinary resolution has been duly ^iven (r). 

(3) A special resolution necessitates two meetin;;s. 
At the first it must be passed in the nuinner required 
for the passing; of an extraordinary resolution. The 
second meetin;; must be held not less than fourteen 
(lavs t)r more than a month afterwards : th<i resolution 
l)assed at the first nieetin;; nuist then be conhrmed by 
a simple majority of membeis present in person or by 

Subject to any r»;;iulations in the articles a meetiii!.' 
may be called by seven days" notice in writing served 
on every member («). 

A copy of every special or extraordinary resolution 
nuist be sent to the registrar (t). 

(/i) Section »>•>. 

(7) Seven days" mitite nt a ;;iiiii\il iiieitiiiu is iiMiallv iietcxsarv . 
See Aitielet'.l of 'riil)lc A. 
( 1) Sc'tiori •>'•*. 
(v) Section <i7. 
(/) Section 7U. 

I ' 

I'lUVAI't; < tt.Ml'AME.-?. 



A |»riv<itc (loiiijuuiy is one tliiit by it.s iutitlrs ; — 
(;i) rcstr'ut.s the riiiht to tiansfor its s)iai»vs ; 
(l») limits its niimbor ot inciiibers t<» tilty (cxrlusivH 
of present omplovccs ami past tMiijtloyors who 
liavc continued to be members of tlie 
compiinv) : 
((•) prohibits any invitation to the public t«) sub- 
scribe for shares or debentures (u). 
H a company fails to comply with these provisions it 
ci'uses to be entitled to the privilej^es of a private com- 
jtany ; but if the failure is only accidental the court 
may ;4rant relief from the consecpiences of tlie 
iii'ulect {x). 

Ordy two persons are needed to form a piivate 
rompany, and in addition to this the lattiu' has the 
lollowinu [)rivileges under tlie Act : 

(1) Th(! "annual summary" need not include a 

balance sheet {y). 

(2) No ■■ statutory report " is necessary (2). 

[■'}) The directors can act without tilin^f their consent 
or sijinin^ the memorandum or a contract for 
their qualification shares (a). . 

(1) No ""statement in lieu of prospectus" is JU'ces- 
sary (b). 

{■)) No " minimum subscription "' is required before 
proceedin<j; to allotment or commeiicinj^ busi- 
ness (c). 

{11) .Scrl.ion 121 ; iiiul ('(impaiiics Art, l!M3, scttidii I (2). 

l.i) Cotiipaiues Act, IIH."!, bcctioii 1(1), and .Si-lioduk'. 

[.) S(Hli<)iMi."). (/>) Section S2. 

(!() .Suction 72. (c) .Section-; b.">, 6'i. 

(<») ll(»klciri ul piefcicucc slian-;, and dcltciitiin'.s have 
n(» Ici^al liuht to inspect balame slu'ot.s (</). 

A jnivat»! (onipauy must send fo the ir-isliai with 
the amiiial smnniaiy a (('rtitirato si-^iied by a diifitui- 
or secretary that the c(tmi»aiiy has not since the hist 
return issued an invitation to the public to sid)scribe 
lor shares or debentures, and (it the number of the 
nuMnber.s exceeils litty) that the excess consists of [nesent 
or past ■' eniph)yee " members of the company ('). 

A private company can turn itself into a public 
company by : — 

(a) Passing a special resolutioiv to that effect ; 

(b) Filing the statutory declaration required of a 

public company before it can commence 
business (/). 

Kiom now until the end of the chapter it is proi»osed 
to ileal with the wijulin<i-ui» of the company ; references 
in the, notes to " Rules '" are to the Companies (Winding 
Up) Rules, 1909. A comi)any may be dissolved in 
three ways : 

(1) Compulsory winding up ; 

(2) Voluntary winding up ; 

(.'J) Winding up under the su[»eivision of the court. 

There is one feature coninn)n to all three methods, 
namely, that a liipiidator is rei^uired to administer the 
com[»any"s property and distribute the assets, hrst among 
the creditors, and then among the shareholders of the 

(li) Sci iioii 1 14. 

(c) ( ouipauiis Alt, l',»l:i, 60t;tiou 1 (.'l). 

(/) ScLtioii 1:11 (2). 

I i 




A coinpanv may b«' wound u|» liy tlif ctiurt (//) : 
(1) It th<f coinimny has piHsj'd a .special resdhitiim 

tn that t'rtWt : 
(J) If (letault is inatU^ in tiling tln^ statutory ivj)oit 

or in hoKlin^^ the statut^jiy iiieetini!; ; 
(.i) If the company does not C(»nunence its business 

within a year of its incor|)oiation or suspeiuls 

its business for a whole year ; 
(I) If the number of its members is reduced below 

seven, or in the case of a private company 

below two ; 
(.">) If the company is \inable to pay its debts ; 
(<i) If the court is of opinion that it is just and 

e(|uitable that the company l»e wo\ind \ip (//). 
With regard to (4). a comitany is deemed to be 
unable to pay its debts : 

(1) If a creditor for over £.")(» has served a demand 

re(piirinif payment by leaving it at the regis- 
tered oHice, and the company has for three 
weeks neglected to pay. secure. i»r cmnpound 
the debt ; 

(2) If execution is returned unsatisfied in wluile or 

in part ; 
(:',) If it is proved to the satisfactiiui of the court, 
taking into account its <-(mtin<ient and pro- 
spective liabilities, that it is unable to pay (i). 

(./) Section 12!t. 

(//) Lndor this provision the co\irt will make a winding-up order 
where the siihstratiim of the company's business is gone or there is a 
complete deadlock in the management of its atfairs {Re. Amfrtrav 
f'iontir I.Mllier Co., f litlHl 1 V\\. r.5t;) ; or where the whole object of 
the <!ompanv is fraudulent {K>'. T. K. 7^(«.<i»«<m/ it- .V"is[iHit7i 1 Th. 
4.".. 400). 

(i) Seetion i:{tl. 






irA'( //*<>*/ I'rlitidti. -\n iipplicjitiiiu for a cutiiinilsdiv 
wiiidiii-i-iip (iidcr must In- iiijuU' by pet it ion to tlio 
court. It iiiiiv !>«' piostMited j^itlicr l»y tlio cuinpanv. or 
a cri'ditor. or a (■<»ntril»utoiy. 

A coiitrilditoty carmot jx'tition imlt'ss (k) 

(1) HtMs iiTi oiitrinal allot tfo ; or. 

(2) K«* has held sliaivs in tlif coinpany ioi at least 

six nioiitlis dnriiii!; tlu^ nit^htvcn months before 

petition : 
{'.)) Tin' slian's hav(( devolved npon liim throutjh 

death, or (hiiiiiLi tlu^ whole oi any part of the 

six months aforementioned have l>een held by 

his wile or his or her trnste<'. 
Hut anv eoiitributorv may petition if the nnmber of 
members of the ctjmpany lias fallen below the minimum 
allowed bv the Act. The court is not obliiied to make 
the order, but may have rejiard to the wislies of tlio 
creditors or contributories (/). All persons served 
with the petition and all creditors and contribntories 
miiv appear and support or oppose the petition, but 
thev must ^ive notice of thcMr intention to tlio 

Procedure under the Order. — When tlu^ order for 
windinu; up is made, the registrar of the court 
forwar<ls copies of the order to the official receiver, 
who j^ives notice to the Board of Trade (hi). The 
Board of Trade {gazettes notice of the oider. anil the 
offifiai receiver then becomes provisional liquidator 
until he or another person is appointed liquidator. 
In the absence of another appointment the official 
receiver is appointed liquidator ; he i.s styled 

ilc) Section i:J7. (I) Section 145. (wt) Hule41. 

( uMI'IF.SORV Ll(^ni)\TI(»\. 'Jl.*7 

' Olliriiil l»<'((>ivt'r and liiqiiitliiloi " (//). Wlioii llio 
iiiil«'f is fniuU'. flu' ntliriul n'ct'ivci iiiiist >iirimn>ii 

.'panitti riit't^tiiius of cicditnis ami (•i)iitril»ii((»ri»'s to 
ilcft'ciiiitic (o) : (I) wliotluM- ai»|»li(ati()ii sliall he nuid*^ 
til tin- ((iiMf to appoint, a licpiidatoi in |»lii((' of tlui 
c.llicial rocoivor : and (2) wlu'tli(!r a[)pIi(atioii «liall \n: 
iiiadt' t(» tli»^ court to a|)poi!it a »(»niinitt»M> of inspection. 

iiid who arc, to he thf tiicndx-rs of tht' cotntnittec \vh«m 


Kor t\ni passin;^ of tlH'S(\ n^sohitions hv creditors and 
( nntrilmtories, a majority in inimher and vahie of those 
votini;. whether pej-.sonalIv or hv proxv. is retpiired 
\\\ itiirh ease. Th(! value of eonl rihiitories is reckoned 
;ii(ordinn to votes <^iven hy the eonipanv's articles. 
This is the only form of resolution in a compuLsorv 
windinu: up. 

If hoth meetings pass tho same resolutions, the court 
loithwith may make tho apimintmt^nt : if there is 
ii ditVerence the court decides it (/;). In any case 
it. is the duty of the official receiver as soon as possible 
In report tlie result of each meetinj^ to the court. 

If any person other than the official receiver is 
appointed licpiidator hy the court in accordance with 
these resolutions, he cannot act as such until he has 
notified his a])pointtnent to the Rej;istrar of Companies 
and ifiven security in the prescribed numner to the 
satisfaction of tlu'! Board of Trade (q). If he fails 
to do so. the court will rescind tho order of ap- 

If the office of licpiidator becomes vacant, the vacancv 

(/() Spctioii li'.t (!)). 

to) Section 152. 

(/i) Section 152 (2) and r. 55. 

(7) iSeetion I4!t (.'{) (<•) and r. 57. 

1 It 

i i 

J i '' 


r i 


t i - 

i ' 
f i \ 

1 ■!»! 

:i hll;: 


ii J' 



H lilK'.l In til.' ii.uit .; \mtil tlii^ is doiio tlio oHicial 
ri'(fi\»»r act"* iis lii|iii<lat<ir {r). 

Sfiihnicnt of .\\\oiis. WImmi tli« has mutlf tlio 
\Minliii!;-u|» (ihUm. tin' tdliciiil i»'rfiv»'i may i«'t|uii«> th«' 
.•.r«*tai\ oi i.tlici tlii.'f oHiccr ttf tlic <tiiii|)aiiy. or anv 
|»fi -tidis wlm liavt' b«'«Mi tlir«Mt<>is ur takt'ii part, in the 
I'nnii.itiuii ut t.h«' n»iii|)anv within oiu' y«nir of the 
uiiitliii- ii|). to send in a '" stat»Mn«'iit of atTiiirs of the 
<t.rii|iaiiv,"' showiiii; its jisstits. tl<'hts. aiul liahilitios, its 
cmlitois iuid tht^ st'ciiritics Im'IiI l>y tlieiii {.<). This 
sfiit«MntMit iinist \)v. v»M'in»'(| l»v aHitlavit. ami !••' iiiado 
within fouit«'t»n days of th«^ order or suth extended 
time iis the otlicial receiver may appoint. The oirK-ial 
receiver mav allow a reasonalde sum for the costs nl 
milking this statement, hut no expens»'s will he allowed 
(.except hv the court), unless they are applied for 
hefoie tin'v are ine\irre<[. The statement is open to 
inspection either l»y creditors or contrihutories, and in 
due course the official receiver makes his rep.trt on the 
alTairs of the company as to — 

(1) The amount of capital issued, stdjscrihed an<l 

paid up : 

(2) The estimated amount of assets and lial»ilities ; 
(W) The cause of the company's failure ; 

(4) Whether further incpiiry is desirable as to the 

promotion or failure of the company or the 

conduct of its business (/). 

Jfe may tuake a further report, statin^? in paiticidar 

whether in his opinion fraud has been committed by 

(y ) Sfction 14y (0), \j)- 
(h) Section 147 and r. :>'. 
(/) Spftion 148 (1) and r. (Ml, 



.iii\ person III tlu'. iMoiiKition of th»^ (((inpaiiv m smcc 
It -1 formation by any oBiciM- of tin; conipuny (»/). 

Cnmmittrr nf lusjurliou. It will by tliis linio liav»5 
Im'i'ii ilecidcd wheth«r tho ofhciiil recoivi-r is to art as 
liquidator or wliotlicr a licjuidator is to bo appointed in 
Ins place; in th«> latter case a coniinitt^'e of inspection 
Miiiv be appointi'd to act under the liquidator (j). 
Tliis committee must consist of (a) creditors, 
(b) contributories, (c) persons holding general powers 
of attorney frttm creditors or ccmtributories [ij). The 
< onmiittee must meet at least once a month, and beyond 
that as often as the liquidator or a member ol the 
committee summons it. It must audit the liquidator's 
accounts at least once in three months (2). Neither 
the licjuidator nor any member of the committee may 
purchase the assets of the company without the leave of 
the court ; nor may any member of the committee 
make a profit out of the winding up without the sanction 
of the court. The costs of obtaining such sanction are 
to be borne by the person in whose interest it is 
obtained {a). 

Special MnniUjer. — The ofKcial receiver may, if he 
becomes liquidator, whether provisionally or otherwise, 
make application to the court supported by a report, 
lor the appointment of a special manager who will 
manage the companv's business in the interests of 
creditors and contributories generally (6). The special 
manager so appointed nuist give security to the Board 
of Trade and account to the official receiver, who adds 

I") S(<i;li(Mi US {•!). 

II) Srctioii l.")2 (I) (1«). 
(.'/) Section ItiU. 

[z) XKuUn I))!), 171. 

((f) Rules 157 — \M. 

(h) JSei'tiou itll and rule 4S>. 


ii; f 


h 11 

. 1 . 

lli«! ln(,,il 111 KHcipt.s and paviiHMits, wiini ai)i)i(>\ td, to 
his own iucouiit (c). 'I'lio comt fixes tJic lormirnTatiou 
of the special matuiger, aiul may increase it alterwards 
I'or '^imd cause ((/). 

The security ^iveu by a special inaiuijier or licjuidator 
(other tliaii the otticial receiver) is fixed l)y the Board 
of Tiade; upon security bein^ furnished. tJie Board 
issues a <'ertificate to that eliect. which is tiled with 
the registrai'. Th*^ costs of furnishing the secuiity must 
he borne personally and are not to be chari;od against 
the assets of the company (c). 

Lis/ of ('ontributorics. — A contributory means "every 
person liable to contribute to the assets of a compan'. 
in the, event of its being wound up'' (/). As soon as 
possible alter the winding-up order the court settles the 
" list of contributories," which is made up as follows : 
(I) The '■ A "" list consisting of present mendjers oi 

the company. 
(■_') The ■■ ii "' list ((Uisisting of past mendters, i.e., 
persons who have ceased to be members within 
a year of the commenoement of the winding 

"1> i'j)- 
A contributory oji the " B " list is not called upon 

until assets have been applied in payment jmri jklssh of 

debts. He is then liable for the amount left unpaid by 

the corresponding " A "' contributory : and his liability 

is in any restricted to debts c(»ntracted before he 

ci ised to be a mend)er. Where there are several past 

holders of the san>e shares within a year, the liipiidator 

(<■) Unit' til. Till' s|iotiiil iiiaiiajiiT s aitiiiiiil> iiiiist hi' vcrjliecl liy 

(>() Kulc 4s i2). (/) Sc'clioii 124. 

(') Uulc 57. ((/) Section Uui. 



may plate them all on the " B "" list, but between them- 
seKes each transferor is entitled to an indemnity I'lom 
his tiansferee. 

The contributory caiuiot set otl' against calls sums 
due to him from the company by way of dividend ; but 
such sums may be taken into accoimt in adjustinj.' the 
ji<4hts of contributories amonjf themselves. Similarly, 
a contributory cannot set off debts against calls ; his 
only cojirse is to prove for the debt as a creditor in the 
windinji; up. But if a contributory, who is a creditor of 
the company in liquidation, becomes bankrupt after the 
commencement of the wuiding up, the debt shoidd be 
set off ayainst the calls ; whether the claim is made in 
the bankruptcy or in the windinjf up, the same rule 
prevails as in bankruptcy (/<). 

The liquidator must give due notice in writing to the 
iiintributories of their inclusion in the list, stating in 
what chaiacter and for what immber of shares they are 
included. They may then apply to the court l>y 
summons within twenty-one days to have their names 
removed (t). Calls are made by the liquidator with 
the sanction of the committee of inspection, or of the 
court, if there is no such committee. Calls may be 
made for money wherewith (1) to pay the debts, costs 
and expenses of winding up, (2) to adjust the rights of 
contributories, inter se {k). 

The meeting of the committee of inspection to 
sanction the call must be summoned by the liquidator 
bv notice seven days beforehand stating the proposed 

(A) .See-lkni 207. Sec also J>\ Ihirkuvrlli (IS(i7), L. R. 2 t'h. 578t 
ami Ljc imrtc .S7m/(^ (1870), L. K. 5 Ch. 402. 

\i) luilc.-. 77 — 8i. 
(k) Section 160. 



iiinouut <»i tin; tall and its purpose (/). It must also be 
Htlveitised, so that a coutributoiy may attend ami be 
heard in leterence to the call or communicate his views. 
Any statement by a contributory must be considered 
before making the call. If a call is authorised, the 
resolution or order nmst be hied with the registrar (ni), 
and a copy served upon each contributory included in the 
call (n). Payment of the call may be enforced by order 
of court made upon a summons by the liquidator (o). 

Powers of Liquidalors.-~\\ith the sanction of the 
court or the committee of inspection, the liquidator, in 
a winding up by the court, has power (p) — 

(1) To bring and defend actions in the name of the 


(2) To carry on the business of the company for the 

beneficial winding up thereof {q). 

(3) To employ a solicitor or other agent. 

(4) To pay any class of creditors in full (r). 

(')) To compromise with creditors or persons claiming 

to be creditors. 
(6) To compromise calls, debts and questions affecting 
Without sanction he has powei' — 

(1) To sell property. 

(2) To execute deeds, receipts and other documents 

in the name of the company and use the 
company's seal. 


! i 

! I 

('') Rule sa. if thcip is luj i.iiniiiittec uf insnectioii the liuuidator 
iiiiist obtain the leave of the court. 
{lit) Rule 85. 
(») Rule S\\ 
(o) Rule 87. 
(/>) Section 151. 

(?) '-•!/.. for sale as a ;;oiii;i ( ouiern. 
(/) Sectiou 214 (1). 

' oMPULsoRY Liquidation. 


(;{) To prove and receive (iivideuds iu the bankruptcy 

of a contributory. 
(1) To draw, accept and indorse bills in the name of 

the company, and borrow money on the 


(■)) To take out letters of administration in his 

otiitual name to a deceased contributor}-. 
(<)) To raise money on the security of the company's 

(7) To do all acts necessary for winding up the 

company except those for which sancti(jn is 

(^) To apply to court for directions. 

Proof of Debts (s).— The creditor must prove his 
debt by affidavit, giving particulars of the debt and 
specifying vouchers ; the creditor must state therein 
whether the debt is secured or not. He must deduct 
trade discount, but need not deduct discount not ex- 
ceeding 5 per cent, which he may have agreed to allow 
for cash. Rent or other periodical payments may be 
apportioned up to the date of the winding-up order. 

Upon overdue debts on which interest has not been 
reserved the creditor may prove for interest at 4 per 
c<mt. where {i\ : 

(1) The debt was payable under written instrument 

at a certain time ; or, 
{■!) If payable otherwise, then from the time when 
a demand in writing has been made, giving 
notice that interest will be claimed from the 
date of the demand until payment. 
A creditor may prove for future debts, deducting 

! f- 




I : 

! ' ' 

■ ' 'M 

ii J i 

'I I ' 




.1 |M'r ctMit. |»»M- jiiimiiii computt'd frotn llic dvrlaialinii 
nt Wii'. tliviilnitl to the timti wlu'ii th«^ (ivl)t. would have 
been |)a\ iihh- acconliiii; to the contiurt ('')• 

The Hijiiidator may Hx a day. not loss than fourteen 
(lii\s Ironi the djit' of notiee. on or l)efoic whieh 
( redilois an^ to prove. Notice of this must be jiiven by 
advertisement in some newspaper and to every creditor 
nientioiieil in tlie statement, of affairs, who has not 
proved. After that tlate claims may be excluded {u:). 

The iicpiiflator other than the official receiver must 
examine iill proofs within tvventy-eiirht days, and adrnit 
oi' reject proofs in writinji. statinj^ the grounds of 
rejection in writinu (//). Dissatisfied creditors <an 
a|>ply to the court within twenty-one days, and the 
court has power to reverse or vary the liquidator's 
decision (:). 

Proofs improperly admitted nuiy be afterwanls 
expun.i^ed by the court on the ai)plication of the 
litpiidator. or if the liquidator will not interfere, on 
the application of a creditor or contributory ('/). 

yj/c/(/t'/w/.v. -The licpiidator, bi-fore declaring!; a divi- 
(U'liil. must give two months" notice (1) to the Boaid 
of Tiade, to be i^azetteil, (2) to such of the creditor.s 
uientionetl in the statement of affairs as have not 
[iroved (/>). Suili notice must specify the latest date 
for h)d;4ing proofs, which nnist not be less than fourteen 
davs from the date of the notice. Appeals ayainst 
rejection may be brought within seven days, after which 
the liqui(httor may declare tlie dividend, sending notice 
lo each creditor whose i)roof has been admitted. 

I") i;\iio lis. 

^..) HuU- M>_V 

{'!) Killer Hi:!, li;i. 

(,) lUili Hti. 

[a] niil.'s 10,^,, 100. 

(b) Hule 150. 



MfHinifs. -T\m li(jui(latoi inav hold nn'oliii^.s «»f 
nrditors uiul contributories from time to time to 
itsccitaiu their wishes in matters lehitiiij; tt) (h« 
w. 'mi;; up: and he must do so when the creditors 
.(n,t contributories by resolution direct, or when 
KMluested to do so by one-tenth in value of the 
cieditors or contri})utories (c). The court has power 
to order such !neetiny;8 to be liekl {d). 

Accounts and AndiL -Thi\ Hquidator must keep 
(1) a record book, in which lie must enter minutes 
nl proceedings at meetings (e) ; (2) a cash book, 
• onfcaining entries of receipts and payments (/). These 
Ix'oks nmst be submitted to the committee of inspection 
lint less than once in every three months, to be audited 
by them (g). 

Every six months the liquidator must transmit to the 
Hoard of Trade (1) a copy of his cash book with 
vouchers and copies of the certiticates of audit by the 
committee of inspection ; (2) a report on the posi- 
tion of the liquidation. With the first accounts he 
must forward a summary of the company's statement 
"1 affairs, showing in red ink assets realised and 
explaining the cause of nou-rcalisatiou. The accounts 
must be verified by affidavit. 

Where the liquidator carries on the companv's 
liusiness, he nmst keep a trading account and 
incorporate the total weekly amount of receipts and 
payments in the cash book. The trading account nmst 
be verified by affidavit and submitted to the committee 
of inspection (if any) ouce a mouth (h). 

('■) iSet tion lo8 anfl r. 121. 

I'/) Section 211>. 

(■ ) Seitiou loti and r. l<j<». 

(/) Rule Hi7. 

('/) Hulr.> l(>7 (2). Iii'j. 

(/() Kulea 170, 17 i. 




' OMl'AMfc.s. 

I'cnilniif LiifiiiihitinKfi. — If a wiiidiii;; ii|t io not cnn- 
» liuleil within mif year, tin' li(|iii(la((>i soufl t(t the 
ir-istiar (in duplicate) a statenient, ol nHripfs ami 
pa,\meiit^s. and particuhiis of the pio(etHliii;js in and 
pcKsitinn of tho lirpiidation. If there have been no 
receipts or payments, he must send an affidavit t(. that 
effect. This statement must be rendered in every forjii 
of liquidation, whether compulsory, voluntary or under 
suj)ervision. It is open to the inspection of creditors 
and contributoiies on payment of the prescribed fee (<). 

Compaitics' Liquidation Accoiuif.—ln all forms of 
windin;; up the liquidator nnrst pay all undistributed 
or unclaimed moneys into the (.'ompanies" Liquidation 
Account at the Bank of England, and the Board of 
Trade will give liim a ceititicate of receipt for money 
so paid (k). In a compulsory liquidation the Board of 
Trade, on the application of the committee of inspection, 
may give their liquitlator leave to have an account with 
ajiother bank (/). Otherwise all unclaimed dividends 
and undistributed assets which have remained in his 
hanils for six months luust b*^ paid into the Companies' 
Liquidation Account. A li(piidator who reipiires money 
foi' payment (uit must apply t.. the Board of Trade, 
which either makes an order for payment out to the 
liipiidator o ■ directs cheques to be issued to the persons 
entitled (//(). 

Preferential Tayments, 

(i) Cnsts nj W'indin'i Uj,.~]n th»; event of the 
assets being insufficient to satisf\- liabdities the court 

(') 8i'ulioii 224 (I)— (.•(). 
(/.) .Section i'i>4 (4). 

(0 .Sculiuu 154. 
(wt) Kiilu 190. 

Preferfntiai, Paymfxts. 


iiiav mdnr pnyinent. of costs, charj^ps, nnd expenses to 
lit' made ill such order of priority as it thinks just (n). 
Tlie ride is that. (iist. tlie costs of the |)etition are to lie 
piiiil ; next, the costs of the windinu up (inchidinu 
sohcitor's changes) : and. tinallv, the remuneration «»f 
ilie Ii(|ui(lator. The proper order of payment is set o>it 
in <h'tail in the Windinn-up Kules (o). 

(ii) Dehf.t KtUitJed In Prwritif.~Ey statute certain 
(U'hts are yivcn piiority in the windinii up (;>) ; tiiese 
iire as follows : 

(I) Parochial and local rates due within the vear 
pit'cediiiii; the coniniencement of the windin<f up {</) ami 
iissessed taxes, land tax, property tax and income tax 
assessed up to .\pril oth precedini; the same date. 
l»ut not exceediiiLi the amount due for one year. 

(•J) Wa^es or salary of clerk or servant not exceediny 
to(( for services rendered durinu four months before 
the commencement of the windini^ up (/■). 

(."5) Wayes of labourer or workman not exceediuL' 
i;-J'). for services rendered during; two months before 
t.lie (•ommencement of the windintf up. 

(4) Wa^es of auricultural labourer who has aureed 
for a lump sum at the end of the year of hirinu to on 
;iiii(»unt proportionate to the time of servi«t' up U> the 
uiudiii"^ up. 

(») Section 171. („) Kulc 1H7. 

(/<) Section 2(t!t. See also a/i/c, p. 217. 

(</) In coin]mls()ry uiridin!.' up, unle-is tiie conipanv eonimeneed to 
l)e wouriil up voluntarily, the date of the winding-up order is 
I . liarded. for the purpose.'* of this section, as being (he '' couiniencenient 
of the winding up." [f the company was previously in voluntary 
liquidation the rights of preferential ireditors arc to l»e ascertained 
Mt, the d:ite of the resolution l,\'athtiii\t riiha, flOKil | ( 'h 8). 

(( ) The managing director of a company is not a '" clerk or servant '" 
within the meaning of this section (//J re Sew.timpir Prnrnif^tiiiii 
SijmUiitle. Lliiiilfil, f 19(H)] 2 Cli, ^49). 



i I 

r ! Mi. 

r I ; 



(•'») All iUiiumits (iiut <'.\«o»Hliiiu £!(((() |„,. which tho 
<<»iii|Mny is hal>h^ iiikKt t,h«? Wnikintiir.s (oiiipensution 
Acts. whiMv th.- hiihilitv has iiccnuHl l»('f(.re the 
wiiKliiii; lip (inh'r. li th." < oinjmnsatioii is a we»'klv 
payiiKMit. the atiunmt diic in r»>s[»(H-t. thtMfol sliall ht> 
taken to l)t( the ariK.imt nf )h»', himp sum lor which the 
wt^ekly payiiiciit could ho icdceriuid (,v). 

TIm! foivi^oiim dehts rank ccnially atnoni; themselves, 

mmI are to he paid forthwith after a sum sufficient for the 

costs and expenses of the windini: uj) lias heen retained. 

Rent. \ landlord is not entitled to anv peculiar 
l)reference over other creditors in the winding uj). As 
rciiards his riirhts of distress tlie rule is that distress 
levied after the commencement of a windin-j, up. exceitt 
hy leave of the curt, is void (/) : Init the court will not 
restrain a landlord from distraininir in respect of rent 
due helore or aftei' the windiuii up. if the company is 
not the lan.llord's immediate tenant: and the Court 
mav allow a landlord to distrain in r«'spect of rent »lue 
after the winding up if the li.|ui(lator retains possession 
lor the company's sole benefit (*/). 

Distress levied within three months of the windinu-np 
order is sid) to the pavment of all preferential debts. 

Remuneration.— T\w ]i(juidat(.r"s remuneration in a 
wiiidin- up by the court is fixed, unless the court 
orders otherwise, by tlie committee of inspection ; if it 
is unnecessarily lart^e the Board of Trach' mav apply to 
the court to reduce it (,/ ). The liquidator is not allowed 

(<) Workini-nV ('()mj)cns.Tti(in Act. I'MMi. s "((.•() 

(/) .Secfci..!! 211. 

('/) Secliipiis 14(1, 142. 

(.') Sfdii.ii Nil (s) aii.l r. \r>4. 

Pkf.vkkknkai. Paymkxts. 


111 make anv arraniiemcnt with imtsous cnniifHtctl with 
the wiiiilinu lip as to his reiimneratioii (//). 

I'he nMiimioration rmist consist partly <»f cniumissinii 
))ii\al)h' nut of the amount realised, after deductinu the 
;iMi'iunt paid to secured creditors (other tluui dehentun! 
holders) out of iJieir securities, and partly of commission 
nu thti amount distributed in divi<lend. 

Ti-nuitKitiiiii i)f Liiinidiilor's OJfirr. The li<piidator 
vacates otfice, if a receivini; ordtM' is made ai^ainst him (c). 
lie mav also l»e removed hy the Board of Trade, if he 
does not faithfully discharjie his duties (a), or hy the 
court '■ upon cause heini^ shown "" (h). 

Similarly, he may resiyn. hut he nnist summon 
separate meetinjjis of creditors and contributories to 
decide wlietlier the resii^nation shall be accepted. If 
tiiev so decide, the liquidator must file a n»emorandu!n 
(.1' the resignation with the registrar, and send mttice to 
the official receiver, whereupon the resij^nation take.s 
elTect. Otiierwise, he nuist report the result to the 
(uiirt and the official receive: . and the conrt will tlien 
deteiiuine wliether or not his resignation shall he 
ii'/cepted (v). 

The litpiidator may apply for his release (1) when as 
much as is possible (*f the property of the company 
has been realised ; (2) on removal ; (.'i) on resigna- 
tion ((/). 

The liquidator must first yive notice to creditors who 
h;ive proved and contributories. with snmmarv of 
lecfipts and payments. 

iji) Hull' 155. 
;:) Hulf 1(13. 
((() Seetion 151). 

(//) Section 140 (c). 
(r.) Rule lt)2. 
(J) Section 157. 




1 u 

!« ! 

^i: 1 



IM.'asi. ,s manto,! |,v ,|,^ h.ku.I u| Tra.lo. nn.l 
•lixrhiiro,..s M„. li.jui.lator fiuni all lial.ilifv (,■). Xnti.o 
"I th.. nni.M for ivloas.. riiiisf l).» uaz.'ttiMl. 


A ruinpanv iiiav l)«> wound up vi)limt,arilv (/)— 
(I) Wli.'ii 1 1,.. p.Mi.Ml lix,'.l l,v il„, articks for the 
• Imation .,1 tli»' (..niiiaiiy .'xpims (.r an i'wut 
•"■••Ills, oil tli.' occiiin.nrc of which th.^ artirh's 
|»i<'vi.l.' that it. shall he (iissolv.'d. and the 
(oiiipany passes a ^solution in m'wva] 
iM»'«'tinu t„ that eticct. 
(•-') If the .onipau.v passes a. special resolution to that 

(3) If the company an cxtia..rdinaiv resolution 

to the effect, that it. cannot, hy reason of its 

liahilities. continue its hiisiness. and thnt it is 

iidvisahle to wind up. 

In (2) and (.-J) the coni{)any must -ive notice of the 

10 solution hy advertisement in the (Ja/ette. 

A voluntary windin- up .hites from the passin- 
of resolution which it (//). 

Wl. .re there are (clauses in a company's articles 
mstrictin- foreign interests in the <-ompanv, a re.soIution 
lor voluntary wmdin- up is of n<. efJVct unless ratified 
l»v the Board of Trade {//). 

Effects. ~~{\) The company ceases t(. carry on 

(/■) .Section 182. 
(g) Section 183. 
I/O (^Hnpinies (Poreii/n fntere^ts) A<-t. Ii»17. sfrtion 2 fa). 

Vol.PNTARN I.Iglll>\TI(»\. 


liinino-^s «»\t»>|»t for tilt' wimliiiv up. Inif tlio jnrpnrato 
fiitu ul til*' cttrupiuiy t t.iiliiiiM's until i). is disHolvnl {i). 

(•J) Its |)iu|»(Mt.y must li.' ii|i|tli»Ml tot tin- ln'iit'tit. 
lirst. of its nciiifois. iiinl iit'xt jiiiioiil.' tlif iiii'iiiIkts 
.irconliii'i to their liijhts (/•). 

(.">) Any alteration in the statns of the niemlteis is 
Void, and tiansfers of shares made without the sanction 
of the liijiiidator are njsu void (/). 

T/ii' Lit/iiiildlnr. Tin; company in general meetinix 
then appoint a liipiidator and lix his remunerati<in {//(). 
On his apjMiintment all the powers of the directors 
iiMse, except so far as the (company in general nieetiu'^ 
or the litpiidator sanctions the continnuntM; then'of. 
Where several litpiidators a'c a|)pointed, at least two 
mnst concnr in the evercise of their powers, nidess 
il is otherwise resolved by the meetini; at the time »'' 
their appttintment. 

Where there is no li(piidator. the court, on the 
application of a contrihntory. may appoirtt (»ne ; upon 
cause shown it may remove one and appoint another (>/). 

Pinn-is itf Li(/iii)I(if()r. -The ]i(pii(lator may exercise 
all the powers of a liipiidator in a compulsorv windiuii 
tip. lie may also, with the sanction of a special resolu- 
tion of the c(»mpany. on the .sale of the C(^!npanv's 
liiisiness to another company receive shares, etc.. in lieu 
of cash (o). lie may enter into arrannenn^uts with 
creditors or memlxMS. which will he binding on the 
• ■ompauy if sanctioneil by an extraordinary re.soluti<»n, 

(.■) Sivtiuu iS). 
(/.) .Section ISC. (I) 
l/) S.'i'tiiiii 1{U.">. 

{in) Si'ctiuii Inii (ii). 

((*) .Section l8tJ (viii), (ix). 

(i>) .Spotion hl2; post, pp. 24:{, L»t». 


■ h 



-'- < »»\ir\\iR!^. 

• lllil nil t li'ilitms ur Iii»'|iiIm'IS ul .|||\ ( |ii>s il ;|(((>(lt'(| l.i 

l»v a, till. •..-,, iiail. MS lllil). .litv (y»). l-'iiiiillv. In- cjim ii|.|.l\ 

'" ••"' '■ • l"I llic .|.'f.'IMlillilli..|l ,,t ;,||\ <|ll<'.t|i.|l 

■ iii>iiij ill f lie wiiidiiiv ii|i ((/). 

DiihrM nj Liijinihil,,,-. 'I'll.- Iii|iiii| iioi ill a \.,|(ii,|;ir\ 

WIIhIiII- lip llllisf fill- ;| II, .lie.' ..I his iipiMiilltriMMlt. With 

iIm' r.'uistiiir witliiti tw.'iit \ -i.mi' .lavs. ||i> umsl, within 
st'srii (liivs. L;i\c ii.itit't' t.» cif.litDis III ;i iiin'tinu tn lio 

lit'ltl wifiiin joint. ■CM .la\s ; at. llmt ii (in- tlio 

.i.'.lit.iis liiiv.' til.' livlit t.. .I.'t.'niiiii.' w lief Iicr mi 
ii|>|»li»atii.ii >liiiU |i«> iiiji.l.- to di." colli t lor tlu' 
u|)|).»iiitiii.'Mt .)| aiiotli.M lii|iii<lator in liis iilacc of to 
art j.iintly witli him. ..r loi tin; a|)|M.iiitiii.-nt c.f a 
. .•niinift«'o. ol inspection (r). 

Thtf li.ini.hitor has powt-r to call -.'ii.'ial nitH-tinus of 
th.^ (•...inpjiny at any time: and if th.' wiii.lin- np 
(■i.iitiiu;.-s for more than a year, he is .liilin..,! tt. call 
a. -<'M.MaI m.'etino at the end i.f this ami each siice.'.'.lin.^ 
y.-ar. and Liiv.' the m.'etini; an ac.-.tnnt ..f his coiidnet of 
the winding np (.s). 

(lists, chiiriies an.l properly incnrred hv 
him. imiiidini his remiin.-raiion. ar.' pavalth' out of the 
assets of the company in priority to all other claims (/). 
.Vs re-ards other preferential payncnts, th.^ .same rules 
apply as hav.- heen aln-ady laid down in dealin- with 

compulsory li.pudation {nuh'. pp. SM. S.)^). .M, vs 

ivpnrsentiny un<Iaim.Ml or iindistrihiited assets must he 
pa.i.l into the Cnnpanies' Li.piidation .Account, as fo 
which set! anfc. \^. 2."5(). 

(p) Sf'tion l-'U. (,/) .S..,;i,i.)n l!»:{. [,) .s.i.iioii |,s« 

(■<\ .S.».tio.i l!»4. ,S..,. „„U. |.. 2:!(i. i.s t.. ■' .talcin.Mit.s - r..,,„i,.,.,| ,,, 
Im- Mfiil l(j it'msir.ii. 
(/) SMlioIl l!Hl. 

Vol rvi \uv Lu/rii)\Tio\. 


Wlx't) tli(> iifYuii'is til tli<> (niiipiiiiv aro iiillv wtuiiitl up. 
tin- liipiitliititr prt>|)ur«'s his ui'tiiiint. and la>s it li«>fnro ii 
liiiiil 'j«'iii'rjil m«'«'tiii'_' of tli«' t'tiMifxiiiv. notit*' of wliicli 
iiiiist iip|M'iir ill till' (Jiizctif ii iiinntli iM-fnn'liiuxl. Tin* 
lii|iiii|iitor t.'ivt's piirtiniliiis ol this nifi'tint: to the 
ii'ui.stiiir. and t.liit'i^ inuiiths fn»ni thf date nf rt';;i«tru- 
limi th<'nMif th<« cnjiipiinv is drciiH'd ti» he di.sHnlved ((/). 

The citiiit, iMJiv ill jiiiv tiiiH' within two yt'urs of tho 
<l;it«> iif till! disHohiiiitii. oiitho iipplicutiotiof th('< li<|uidator 
iir any pt-rson iiitoiosttul, d«iclar« the n^snhition to have 
Im'cii vi»id (j). This iniiy mahh' .in unpaid <r«'ditor to 
uMili> assets of a dissnlviMl companv. 


When a companv ' as liv special or extiaordinary 
iiisithitioii lesolvt'd tt> ind u}) voluntarily, the court 
iiiav (udtM- that tli«> voluntary wiudin<i; up shall coutiuuo 
^iiltji'tt to the supiMvision of th« C(uirt (7). The court 
iii;i\- make this urdi-r on a p(>tition for com|)ulsorv order. 
The voluntarv liipiidat-or is usually continued sid)ject to 
sermity heiii'i i^iven. I>nt the court sonu^timos appoints 
ail additional liquidator. The litpiidatiou continues in 
the same manner and the liipiidator has the same 
powers us in a voluntary windinu up, subject to 
any restrictions imposed by the court ; but the sanction 
of the court takes the place of extraordinary resolutions 
of the company. 


It is often desirable to transftir a company "s business 
and assets to another company in consideration of or in 
jKiit < ousideratioji of .shares in the trarisferee ciinipany 

(») .S.Mli.iii I'.t.".. (.(■) .SeHiou I'L':!. (//) Secti.iii l!iit. 

24 i 




Miich a tiaiisact.iun fiin I..' .'fl'..,f..,l l,v n Ii(|iii(lator nndor 
a (•oiii|)iil.s..iv or sii|H'i vision oi(|.m(-.). and also in a 
voluntarv windiu!^ up (a). In tl,.- cas.' ..f a vohintaiv 
windin- uj) \t is ♦•nVct.'d by a roc.nstrncticn scluMne. 
wliicl, is carried out as follows : A si.Hial rosolution is 
passed hy the transferor company that the ((.n.panv be 
wound up. a liquidator appointed, and a ueneral 
authority conferred on him to transfer the company's 
assets in return for shares, policies. (,r other interests' in 
the transtVr,.e c.mpany (/y). Proper notice of these 
resolutions must be oiven to the shareholders. Any 
iriend)er of the transferor company wh.. did m.t vote in 
favour of the resolution at either of ihe m.-.-tinys may. 
within seven days after the conflrmatorv tneetin". write 
t'. the li,|uidator <lissentin,ir from the resoh.ti'on and 
'••^<|'"nM,u the li.p.hlator either (1) to abstain fn.m 
•■arrymu the resolution into effect, or (2) to purchase 
his Miterest at a price to be fixed by a-recment or 

If the li.pii.lator decides to take the secoml course 
the money must be paM bi^fore the company is dis.solved. 
The company cannot deprive its shareholders of their 
li-hts to dissent under the section, and any provision to 
that effect, whether in the memoraiulum (w articles, is 
void, [f the scheme is unfair to a lary*^ body of share- 
hohlers in the old c(,mpany. a})plicat.ion may be made to 
the court to substitute a c..mpul.s..rv for a voluntary 
windiuo up ; if the petition is successful, the s.'henie is 
Void unless sanctioned t)v the court (r). 

(c) .Soctii.ti ir,\. 

(I>) The traiisf.i,. 

i'lj Section l!»2. 
rri /• •, , '■<"ii|"^'iy niusf n.,t 1... ;, f,„oi<;n romi.nnv 

Jt'l,. -1S4). 

(. 1 /.'. r..„.nlulal.'./ \„„//, H,n,d Mi,„s. f,n„;i,.l, \ \iMm 

f'li. A'M. 

\ oi.r.NIAKV liH,>riI>AIIiiN. 



A ( nmiwiiv. wlictlicr in liciiiiilatioii oi iint lia^ j»(»\\<-i 

ti> outer into an aiianuoniciit wi 

th it. 


(icditois (ti 

nK'nihcrs. For this puipoM' the (oiiit may order a 
iiieotinu of creditors oi' niendiers, as tlic case may Ite, 

til l)c held ; this mav he done on 



iication of the 

( nmpaiiv. a creditor, a mend)er. or the Uiinidatoi'. If 
a majority in number representing three-tcuirths in vahie, 
ol those jnesent in i)erson oi by proxy auree to the 
airau;;enient, it is binding if sanctioned by the court (rf). 
Ill a compulsory winding up, the court may defer its 
-auction until it has heard a report by the official 
leceiver (e). 

A company " about to be, or in the couise of bein;; 
wound up voluntarily," ■ may also enter into an arrange- 
ment with its creditois if sanctioned by special resolu- 
tion : such an arran;,;ement will be binding on creditors 
if acceded to by three-fourths in nundter and value ( / ). 

Lastly, a licpiidator has powers to cttmpromise with 
.issenting creditors. For this purpose, in a compuls(»ry 
winding up the consent of the court or committee of 
inspection is necessary ; in a winding up under super- 
vision, the sanction of the couit ; and in a voluntary 
winding up, an extraordinary resolution (//). 

(( ) Rule "4. 

(/ ) Seel ion I'M. 
(-/) Hcftioii 214. 

I'AliT IJI. 



Thk Salk ok (ioons. 
Tins l„a.,i<h ni the law is now to hv. J.,u,h1 ij, the Sale 
"1 Goods Ad, 1893, t . .vhich Art relere.ue is intended 
whenever m the eonise of the chapter the letters S. (J A 
are used. A eontraet of sale nf ,oo,is j, a ,„ntra^-t 
whereby the seller transfers, or a,,rees to transfer the 
|.r..perty in goods t.. the buyer for a nionev (•onsiderati..n 
called the price (a), (inods include all personal chattels 
other than things in action and nionev (6). 

T/h' douds Sold.~~\i, at the time of the contra.t 
specifie u<K.ds s(.ld have ceased to exist withr.nt the' 
knowl,Hl.ue of the seller, there is uo contract (r) If 
there is an a,uree.nent t<. sell specific goods and sub- 
MHiuently the go..ds without the fault of the seller or 
l»uver perish before the lisk passes to the b.iver (./) 
the agreement is avoided (e). G,.ods can be the suoject 
of an agreement to sell, although thev hav.; not yet 
come mto existence or been acquired by the seller (/). 

CM '-<. t-i. A., ISIKJ, .-,. 1 (ij. 

(/ ) S. <i. A., s^ :,. (,.„„i., ,,., |,j i,j. ^,,,j,„,,,;i i.'v thrill,-, ,., .„ |„. 

TiiK Pkuk 


Tlir, (listiiulioii iK'twcon a .sale hikI an a^ictMiioiit for 
siiU'. iiiiiy he itiipoitant. lor whereas if the -^ood.s uie 
iK-tuully ,sold the property passes at onee, if there is 
l.iit an aureenient to sell, it will n(»t become a sale 
until the tiin<^ e.Uipses or the conditions are fidlillet' 
siiliject to which the property is to be transft-rred (</). 
When the puichaser obtains the -^oods under the terms 
ul the aj^reeinout, th<' sale becomes c(,mplete. When 
(lie ^ioods &o\v<id to Ije sold are not the existing property 
ol the seller, the beneficial interest (but not tlu' -lej^al 
[.rnp( rt.y) passes to the buyer without further con- 
\('\ .!ice the moment they come into bein<i, if the}- 
. ai. b(> then identitiod as the j^oods ayreed to be sohl (h), 
.md the aureement need not so specifically describe the 
uoods as to make them easily identifiable ; it suffices if, 
nu coming into existence, they answer the ilescription 
111 the aj^reement. so as to be capable of being identified 
as the goods assigned (<)■ The result is. therefore, that 
>a\c as against a transferee who acquires the legal 
illl.•l(^st for value and without notice of the prior equit- 
al)h> interest, the mere agreement to sell transfers the 
|Mn[tertv in the goods to the purchaser. To get a title 
.igainst everybody, the purcha.ser must acquire the legal 
interest as well {k). 

Tin /'/•<«■.— This uHist consist of money (/), else 
the contract is one of exchange and not of sale. If the 
amount is ti\«'il in th(> contract, this, of course, is the 
juice ])ayable ; sometimes the price is left to be fixed 

(<;) Sivlidii 1 {I). A.S to ibi" rlTect ol this, bce put-t, \\\<. lihti it si'/. 

l/-) llntrni/,! V. Mor^hnll (l»tij). 10 li. L. Cas. ll»l. 

\,i) TiiiiOi) \. ■/"". Oljicuii B'riinr ilSSS;, i'.i x\pj». I'cK., at J', oi'.}. 

(I. ) .losiph V. /,v«/(-' (I88al, lo Q. 11. D. -SO. 

(/) tt. Ci. A.,s. \.[l). 





■ ■ 








J 16 

Ihi, S.\r,i, <»^ (;..u|,,. 

""•>•••' '-v Ihc uHlinary cmuksc ol .loal.uj; betvvm. lh« 
I'-'""'-. Undo, all ,.,Ler . ircun.staiues a ,cHs.,ual,le 
P".o ,. presuiiml t„ have Keen iutondod (/«) A 
••■HS...U.I.I,. price is not nocos.arily the n.aiket pnce ; 
^vliat ,s ,.H,soual,le .Icponds on Mi. ciicuuKstau.e.s nl 
•'i"l. |.a.t.. ..lar .ase (.,). || ,1,,. j,,i,, j, ,^, ^^^ j^,.,,^^ . . 
tHe valuation ,.[ a thud parly, .nd that thud paity 
cannot. o, do.vs n-.t vahio, the a^,ioo,nent is avoided 
-xrept ,ha. (,) so far a,s .ood.s hav «, aheady been de- 
Jiver.d to .ad appropriated by the buyer-, he n.u.t 
]'a,v a lair prire for then. ; and (u) d the third partv 
i« luevented from making the vah.ation bv the act of a 
I'ait^y to the c.utract of .sale, that party 'n.av be .ued 
lor damages (>i). 

Who may Sell. 

< apaeity to .^ntiact i,s treated of a,>/r. at p 31 

As a rule, the ouner (o) by hnuself or his a^eut 

can sell and ^ve a good title (p) ■ but the follouin.. cases 

are m this respect peculiar (y). 

(a.) Suk nf (ioods n, Mndrf ^V.^/.-Market overt 
•" he city of London is held every day except Sundav, 
and in every shop where goods are exposed for sale In 
the ordinary course of the trader s business. Elsewhere 

P'f Lord Halskikv m // ,'""""> " Uk iiaiuluKt.t i.eisoii. iite 

\\ IH) MAY .SkLI.. 


coifain (lays aio set iipaifc by |irc.s(iipli<»n. iirant, <»i 
otliciwiso. (»i) wlticli. at a [taitiiiilar jilace, market overt 
is hold (r). But the tiansaitiou must have commenced 
and endefl in open market — e.g.. sale by sample will 
not 1)0 siitticient to ])rotect the buyer, unless the l»ulk 
I"' openly sold and transferred in open market (■>.•). II 

1 Ik'. thinv; be sold in a private room (0. <»i' between 
^iinsct and sunrise, market overt will be no protection 
ti> the purchaser. Sale to the trader in his shop seems 
not to be, within the protection of market overt in the 
( ity of London (/). When ;:oods are sold in market overt 
lo a bona fide purchaser, witlunit notice of the sellers 
defect or wanr of title, ami accordinu to the usaji,e of 
the market, the sale is binding on the true owner (except 
its mentioned below). thou<>h he neither sokl them nor 
authorised their sale (n). 

If <:oods are stolen, and tlie owner prosecutes the 
thief to conviction, the property in the j;oods so stolen 
revests in the original owner, notwithstandinu; any 
intermediate dealinji with them, whether by sale in 
market overt ov otherwise (j). 

(b) iiale bij a Pdirnee. He may geneially sell the 

^ioods upon default (y). 

(/) (159(i). ."j Kcp. .S;l (li). 
(x) //(// V. Smith (1812). I 'raiiiii.. .11 I'. .".32. 
(0 llurgrearr v. Sjinil.-. | I8it2j I Q. H. 25. 

i'() S. <>. A., s. 22. 'I'ln< scitioii does not dispciuse with the statu- 
tory formalities ic((iiiie(l on the sale of horses in market overt. 8ee 

2 .V ;j I'h. & .Mary. <■. 7, aii.l ;il Kliz. e. 12. 

(I 1 S. (>. A.. s."2t (I I. Sec also the Lan eiiv .\et, IDiti, ;-. 45, whi<li 
ciitibles the eourt to award a wiit of icstitutiou on coiivietiou of tlie 
otlciukr ; but .-joc jiuft, p. 251, note {<j). Section (5 of the Criminal 
.Vppcal Aet, 1907, [irosides for suspending the ojieriit ion of this section 
Ml ease of an appeal from the eonvietion, and if the eonviition is 
ijuashed, its provisions do not take etlei t. 

('/) Martin v. Iked (I8t>2K ;U L. J. C. P. 12il, 12b; and see i>o,t. 
V. 172. 



? 1-. 
i ■ 


'I'lIK SaI.K ok (luuiis. 

((•) A;inds.~\n a-cni, iiiitlioriscd (.. m'II (.). or m- 
IriiHttxl with ^(.()d.«<. or the (liKimicnts (.1 titlr U^ tlieiii, 
may, within the .stopc of lii.s husincss. imd .sul.j.Tt {u 
rtMtaiii icstiictions, j^dvc u ^ood ii||(. („). As to tiiis. 
see iiiidor - AtiKNCY " (/>). 

=: J 





1 ! 

(d) ,SV//^' hji flu I'osfti'ssof.s i,f (!(u,ds or I)i»-iimnils of 
Titlr to them.~\S\wve a jhtsmi liaviii- sold -.Mxids 
<ontiim.'s in possession f)f the uoods or the (h)eunienls 
••i title (r) thereto, (h'liveiy („• transfer ol the uood.s oi 
documents of tith'. by such vendor or Jiis mercantile 
a-ent((/). under ajiy sale, pledge, ..r other disposition 
thereof, shall have the same effect as if such v.-ndor or 
other peison were expressly authorised by t!ie owner <.f 
the -ioods to make the same ; provided tliat the person 
to whom the sale or tlisposition has been made acts 
bona fide and without notice of the previous sale (c). 
Similarly, where a person havin- boii;j:ht or at^reed to 
buy ;ioods(/), obtains, with the consent of the seller, 
possession of the goods or the ib.cuments of title to the 

(-.) S. (J. A..S. 21. 

('/) Sir the Factors Act, IN8!> ; S. (J A s •>! (•>) 

[h) And, pp. I4i ,1 .•<,</. 

* V ■wJ,^?"<?"V'* ''"*■' " '*''" ""■ ^^""*'' ""'1"'"^' '^^ i" the Fact,.r.s 
Act, J88 S. a. A., .s. (12). A. In what the c.xp.cs.inn inrludc... .cc 
mitr, p. I4.{. 

(d) Fur tlic iiicaiiiiij^ of this, sec iinh, p. Ml. 

(<) S. (i. A., s. 25 (J). A simihir provision is to l,c foiiii<l in the 
iMetor.s At, ISSit. s. 8. 

(/) A purchase; from a possessor unthr a mere opti,,n to huy 
not -ive the purchaser title under this section ; tlierefore. one who 
holds goods under a hirinj: a-.Tccmcjit. with ai. option to purchase 
.annot give a good title to a suh-purchaser or r-ledgc.. (H,lh„ v.' 
^!•,lllH,rs, 1181,„| A. C. .171). However, the section applies ,i' ,1,, 
hiring agreement impose.s an ol.ligalion to huy. Sec /.,, v. IMhr, 
|18!}J] 2 K. B. ;(IS. A person has "agreed to huy ' within the 
ir.eanmg of the section allh..ugh the c.mtract of sale was conditional 
iMurkii. V. UhaU, [l!J17J 2 K. H. 480, ('. A.). 

\\ MO M.w Sell 


u'xmIs, (Ik; (Iclivoiy nr tiauslnr l>y tJial )K!>n. or l»y 
.1 iiM'icantilo a^tjiit acting for liiiii, of the "^oods or 
i|iiniiiH'ri(.s of title. iiiul(;r any sale, pledge, or other 
ili>l»o.sition t hereof, to any person receivinj:; the same in 
joimI faith and without notici; of any lien or other ri,i;ht 
ol the oii^inal seller in re.s|)eet of tlu; jfoods, shall have 
the same etfeet as if the pers(»n making the deliverv or 
transfer were a merrantilo a;.;ent in possession of the 
uoods or documents of title with the consent of the 
>>\vnet (u)—i.e., his tlisposition of the ;ioods or docu- 
ments of title will, in general, give a good title to the 
iiuiocent suh-purchaser or pledg-c, though in fact he 
has no right to sell or pledge the goods (fi). 80 in 
Cn/tn V. Pockdt's Bristol, etc. Co., Limited (/), the seller 
"t L;oods forwarded to the buyer a bill of lading indorsoil 
ill blank, together with a draft for the price for accept- 
ance. The buyer did not accept the. draft, but 
transferred the bill of lading to the plaintilTs, who 
look it in good faith and for value. The seller stopped 
the goods in trnnsilu. Th ; Court of Appeal held that 
tlie plaiutirts had actpiired a good title to the; goods, as, 
although it was not uitended that any property shouhl 
|>ass to the original buyers until acceptance of the drait, 
they had nevertheless obtained possession of the docu- 
ments of tith; with the ccuisent of the seller. 

(e) MiacelliOKon.s. —Thii following {inter alia), uuough 
imi owners, may give good titles : Sheritfs and similar 

VI} H. (;. .\., s. -^.i (L'); iiiul sfc the i'lutdis A(t, lhS!», s. '.I. And 

I his is SI) lh(iiit;li the tiiio owirt |ir(wotuti's. and obtains a cuin iction 
liii larceny a.i;aiiis( tlio |)cison ilispo^inj,' nf tliu jioods (I'ui/iti: v. 

II //><)/(. I |!S!Jo| I (). 15. •).");{) ; l)ut tlie case was not within the I'ttctora 
.\'.h {iijiii.. j isiijj 2 Ki. li. .»;;7;. 

(/() Kaetois A.t. 188!). s. 2. 

yt) [ISlMtJ 1 (l IJ. liW; 4 Com. Cas. His. 


J. .J 

ThK Salk III (,'()iM>S. 

1 I 

"(h(Tl,. whii „M/.,. Iiv u,,^ „t rxo.Mtli.ii (/), |,„i ,1 t|„ 

n-al <.\vn.M i> nut tin- |ii.lmnriif ,|..|,t..i. «h,. title of M,. 
piu.haser is nut always ^.,,.,1 (/) ; masters „f vesself 
who soli iin,|,.r .stu'ss o| ciitimistamcs (/;/) ; innkeepoif 
who sell lelt with them iiiider the poweis eon- 
ieiied oil them by the limkeepens Act. 1878. 

It .should lie added that ii th.^ title ol the person 
selhn- is voida.l)le, and not void, he r;in -ive a j^ood title 
t<» a purchaser who buys in ;;oi.d faith amf without 
iiotiee of the defeit in title {h). 


Formalities of the Contract. 

Subject to certain statutory e.xceptions. a contract of 
sale may be in any form ; it nuiv be made bx- wo-d of 
mouth or in writin-, partly by writin- and partly by 
word of mouth, or merely implied from the conduct of 
I he parties (.): imt if the value <.f tiie ,>ropertv .sold 
m the one contract amounts to £!(» or upwards. i"t mav 
l>e unenforceable by action unless evidenced by the 
proper writing. This was formerly provided by' <. 17 

IIH971 I Q. H. 558. " ' '"""""'''■ v. Conu,,., 

(I) Crane i{; Sons v. ihiiiniHt. {\\»\:\\ 2 \\ \>, \\- 

(in) St'f j:;o«/, pj). o(M, ")U2 

in) s. (;. A., 8. 23. 

io) >. G. A., s. :{. s,.(ti„„ 4 nf th,. .St.itut,. .,1 FiMu.U las to uliuli 
MT ««/,,,. o, .nay atf.,-. a sal, ., 1, as ,h.. sul.j.l, ',u tu" , v 
he a„ mtorrs, ,n lan.l. or t|,.. a.,...„nu „, ,nav b. not o ,e pc , , i?. 

II I,' J I ••.■■> ^ ,1 ' ^—'< limn \. Sliiiiiuti't (ISO'll 

II ha,st,.itC>; .\i„,f/, V. Siiniuiii |IS-'<M 'I n V (■ -.1 ""UW-0. 

.;;».*», :»T„,,,u^,,.;,...M,:.„;;:l^:::;,iJi* 

r-ntH. !..„k to cknvin. Imi,.!,! i,,„„ ,i„. laiul. ,-, ,|o (hey looknt it a^ 
a more «areho„s, •, Cf. L.,„njs. y..W/ (18^8,, Ht. Cb 0508 


.1 tliP Stiitiitc of Fiiiutls. uitw rcpliift'd l)v s. 4 nf the 
•^iW. t»l (Jiiocis Art. lM<t;V wliicli nuiH as follttws : 

" A ciintract fur tin' sal«' ul aiiv liood.s of the vahie uf 
t»ni poiindrt Ml- iipwaitlM shall nut be enfurceahle 

l)V action (p) unless the buyer 
of the uuods so sold, and a( 


accejit part 


V receive 



same, or -^ise something in earnest to bind the 
cctritraci. or in })art payment, or nnless some note 
or memorandum in writing (y) of the contract 
Itc ma.d<i and si<*ned by tht; pait\ to be char«ied 
or his auent in that, behalf." 

From this it will he seen, that a ocmtract for the 
ale of uooils will not be enforceable by actioj\ nnless 
there be either : (i) part performance, either by way of 
acceptiiiii (Did leceivinL! the iroods, or ]»art payment of 
ihe price; or (ii) an earnest, or (iii) a iMemorandum 
siL'iied ; or (iv) value under tlO. 

Two points of diHi( ulty arose : Firstly. Is an ayree- 
iiM'iit to deliver at a future time for a price a contract 

1)1 sale withui the statute C Decisions were to he l«>und 
linth ill favour of and ai^ainst the inclusion of these 
executoiv aiiieements. but Lord Tenterden's Act (/). 
followed by the Sale of (Joods Act, settled the (piestion 
ill fax our of inclusion. 

Secondlv. When is a contract one (»f sale, and when 

(/() Tliu effect of this has been already <lealt with (see ante, pp. Ti, 

Ii). "Action" includes ■' .xct-t iff " ivnd "' ct)iii\tcrclui. "' (the Act, 

(7) The cuntents uf a moiKMunduin will suftice to satisfy the 
■^c( lion are dealt with («»(/^, pp. (>-!•). iMUther, as to contracts for 
tile sale of gonds wliicli are not to he performed within a year, sec 
(lllln, p. II. 

(;) f» (Jeo. 4, c. 14. s. 7 ; now repeuied (is to this hy the S. O. A.. 

in II: 


^ ; 

; I 




Tiir. Sai.k or (;o(»i)s. 

-.110 of wnrlc iin.l lalx.iir ,i„n.' '. It A. .■tuplnvs i. inilo 
t.. iiiiik.' a .suit .,1 .loth.'.s. Mm. tailor supplying<'iia 
iiii.l lal.oiir. is this sal.' or work ( |f siil... tlir statiif. 
iif.plirs ; it work-, it ,|.h-s not. TImm,. <',iii 1... little ijoiilil 
lliiit III this rximiplc the colli lii.t is o|,r o| sal.'. I,ii| 
Mioi.' .iilliciilt. ciis.'s iiiisc. In CI,,,/ V. y>tlc.s{s). ii 

l"'"^''' "-' I '•• |"i"< ii work, th.' nut.Tiiils t.. In 

siii.|.li.'.l to him : this \va,s .hri,|,.,| to h.' a .•ontia.l joi 

^^■'"■'''' '""' I"' '■ "ot ..r s;ih' : iin.l this .Ic. ision Ims I n 

ii|.i)r..v.',l. .\' tiik.' th.' .as.' .,| .-, |,i.liin' (,, ]„• 
paintcl l.v an iiitisf ; is th.' .■..iitia.t ..n,. ),„■ his skill, 
or lor r.h.' siih' n\ th.' |.i.|iin' ( |'..i,i.(m'k. Ci;.. tlioii-hf 
'•"' l'"in.'r(7). ImiI Ri. a<'ki!Ii;.\. .!.. th.' l.-.t l.'r (//). 
In Arv V. (nuj/in (n). ;,, .Icnfisl, I.i.mi'JiI mii ii.tion lor 
-•"'iti'ii'l t.'.'lh sii|,|.li,.,|. jin.l fli.>..,nrt <|.'.i<|<.,l in Ijivoiir 
'•I sal.'. •■ Wh.'n th.' c.ntia.t is .such that a. < hiitt.'l 
is ultinuit.'ly to 1... .h'liv.-r.'.l hv Hi.' phiintifT t.. the 
'h't(Mulant, wii.'u if In.s h.'.'n s.'i.t, th.-n <li.' .au.s.' of 
;i(ti.»n is himmIh .sold and .l.'livcrc.l "" (('i:.)mi'T().\. ,J.). 
•• If tho contract !>.> sii.'h that if will /vs//// i,, thr sair 

»J ', rhnlh-l. the i)r..p..r f..rMi ..f ;i<ti..n if tl iMpl..ycr 

r.'nis.>s f,<, Hc.opi th.' arficl.^ wh.'ii nia.lo. wonl.l lie for 
Mot ac.'cpfing. Mut if fhc \v..rk an.l lahoiir W. b.'-towed 
in such a tnann.T its that the result would not fx' anvtliino 
which could ])rop..|Iy !>,. .said to he the siil.ject of sale, 
fh.Mi an action for work and l.ih.Mii is the proper 
renunly " (Ml.xckiu'kx, J.). 

This was d.'ci.Uvl hy a sfron- c.inrt. and tlu^ 
rule enun. iate.l hv Mlackhuk.s. .1.. has h.'.'n styled l)y 
Mr. lienjaniin as '• a rule s.. satisfact.)ry. an.l iiitpiirently 

K-) . I8.";ii;, 2.> 1>. .1. Kx.ii. :;;(7 : I H. \- \. 7;'. 

(/) Clui V. Ynkn, Kiipnt. 

(ii\ L,- V. Uriffin (iHrth. I \^. !c S. l>7l' : ;}.i \.. .[. i). \>, o.-.o 

FoUMAMTIKS Of IMF ('tiNTRXfT. 'jr." 

" (»l)viouH " (/•) ; if Minv tli<Mftf(ir(> )m> ronsitlorod tlio 
ilcst >4iii(l«' tn lollnw. 

.lnri,ttinrr and Umipi. |t, will Im> iiotict-d tliat tlio, 
■i.itiilf draws a (liHtiiictiuti lictwcen accoptaiict' aiul 
i'-i<'i|»t, and iri|iiiiv> i,Htli. TImmc niav he icccipt 

illiniit acct^ptadct', tlific may Im- arccpfaticr witliout 
ipl is often t'vidt'ncf of an acceptanct'. 

• l.t. 



ml It is not tlic same lliiii^."" Thus, if tl 

ic v« 


li'liS('i(>(l "oods 

to a <arri(M' iianuvl by rli»* puicliu.s»>r, 
ilit'ic is receipt, l(\ till' pnirliasei. Init not nonwsarilv 
■ II I eptaiice (//). 

(a) What a.Mioiints t< 

an aceeplanrc 


us IS now 

ielint'd l.v the Sale of ({oods Act. \H\K\. s. 1 (li). which 
• lovides that : '" Tln'ie is an acceptaruo of i^oods within 
lie nieanin.; of this sec tion when tlio linvcr does aiiv act 

in relation to th< 

1 ;ioods which n^coiinises a pre-oxistinti 

intract of sale whether there be an 

Mniiiance o 

f the 

ii(((rptance in per- 

cotitract or not." It follows that tl 

c wor( 





this s<'ctioii is not 

iiieiillintj o 

Mie ordinary meanini;. nor that whi<-h the word hears 
m other portions of this very .\ct. An act which may 
. I mount, to an " acceptance "' suthcient to render writin«,' 
uiintHessaiy. may not arnoimt to siu /i acceptance as to 
I oinpel the purchaser to keep o^oods not up to sample. 
Thus in I'„f/e V. Morijon (:). the defendant houuht 



hy saiuph 


(Ml It arrivet 

I. it 




iiii|ia(ked and conipar<'d with the sample ; the purchaser 

I I'usidered it ilefectivc, and at once rejected the whole : 

field (by the Court of Ai)[>eal). that there was evidence 

!i) IViijiiinia on .Stilc (iVh (mI). |.. Ij.".. Uther eastw are : .Ml-iiixt„i 
\ . Hilt (laiH), Hli. & V. 277 ; Oraftun v. Annifagt (I84ti), 2 ('. H. 3:{(i. 
(//) Hunt V. Utr/tl (1853). 8 Kxch. 814. 
(:) (ISS.>). l.-i l}. H. n. 228 


i. ■ 



ThI' S M.I' III (liHili ■. 

(Ill will) li I III' |iir\ iiii.'tit tiiiil ;iM ai'('c|it:ui(')> within tli 
it;itilt«' ((/) tliitll'.'li tlii'ii' Wiis iii*ii<> of nil fui t'|»t:ilii 
'^iiHirii'iii til jihtIihIi' ultjfi timi to flit- •jihmIn. It iiiiitfur- 

tllt'll. tllill .111 ill ( i'| 1- slidirii'iit It. I till' |»I|||M(.M' 

III thin ;i'itinii iH'i'il imt Itt- -tin li a^ to ilcliar tin' plitiiitil 
Ihilii uliji-rtiii'j III! acriiiiiit ul i|iiaiitit\ m t|iialll\ : a 
was slatftl In CoiidV. L.I., in l\ihl,lr \. (i,,,i,ilt [},] 
" nil that is wiiiitt'il is a- ri'ifi|»t. ainl smli an arcrjitain- 
■ il I In' 'jiMiils. as sliiiws I, hat il has ic^aitl tn ihf i initiatt . 

What aiii(>;iiits ti> siirli arccptaiKt' ill s|iftili(' rases i 
a i|iit'sti()ii III latt. A iiific olitaiiiiii^ ul [ilivsical piiwc 
uvt-r a tiling is it'rt'i|»t rathfi- than acrcptancf ; Imt, m 
tin' iitht'i- liaiul. il' thf purchaser iiiaiKs the linmls ain 
ItMAt's tln'iii with the vi-iitliir. there is an acceptance 
thiiiijh nil receipt. The lullowinL^ iire cases in whii-| 
the i|iiestiiiii has aiiseii. it heiiiu snlunitteil that tlmsi 
• lecideil miller the Statute id Kiaiids will .s»'rv*' as .jiiide; 
to t,he nieaniii'i of the statiitorv (lerniitioii of acceptaiUM 
now iiiiiler consideration : 

liiiveis olVer to resell the tliin,^ : -//<'/(/, evidence o 
an acceptance (( ). 

Di'fi'iidant counted over tioods and said " all liiiht 
Held, an acceptance (</). 

Delendant receives floods and keeps tjiein an nn 
reasonable tinn' : IhhI. evidence of acceptance (c) 

Defendant had jtiweileiy handed to him. and letiniiet 
it. at once, saviiiu. '" there is a mistake." This wa' 
prohahlv no acceptance (/ ). 

Hei-eipt and acceptance of a sam|)Ie inav amount ti 

Ik) ^il.itutf of Kiiiiuls. ^. I" 

|/.) (IsTS). M h. T. (.v.s. ) HW. 

(i) IJli idiiiMi/i V. Cldifldii (ISI7). 7 'fMunt. .lUT. 

(./) Sitiindir" V. 7V</'/' ( l«-til). ^ K.mIi. '.i'MK 

{' ) liiishil V. nii.'hr (IS")!)), I.-. Q. H. 442. 

(/) /'//i7i/iv V. lt,-l"ll, (Ih2:J). 2 U. .'i,' c. .-.11. 



.irc(>|it.anr« or not arn.rdini; to wfit'tli.T tli.- .sarnpks 
ar.' or ur.- not part of tli.. hulk to hn .l..|iv.^ro(l (7). 
•ioodh w.'rr (It'liv.'r.'.l to thr •.uy.'r. wIm. took u su.nph- 
Iroin thoni. ami. aft.M- .'xumininu it. said that th«' 
;;o(mI« w.«r.' not r.iual t.. th.' sainph-. and that h«> 
wouM not hav th.'tu : Jlrhi an a<<r|,tan.<« (//). 
l).'f<'n(hintnH'rdy insp..(tt'd th»! jjoods. and thon wrote 
••n th.' advic.. not.', " U«jo,te<|. Not, according to 
Kipr.'Hontation "' • Held, no acc-ptanc' (/). 
(!•) What amounts to a receipt ? On this it is said 
' wh.'n the li.'n of the vendor has jrone tliere lui 
'•"';'i r<'<eipt. and this is. generally speakin-. correct (A). 
Tliis may ha|.pen in numy ways. Thus, if the j^oods 
I'- actually delivered to the huyer. or he taken hv"him. 
there is receipt; so also if they are delivered to an 
.i^eiit of the purchaser, or to a comnu^n carrier named 
l>v him. An atfreement hy the ven<l(.r to hold the 
property for th<-, huyer. th..u<;h actual posHe.ssion is 
tint altered, constitutes a receipt by the huver— f.y., in 
Elmore v. ^lone (I), a puicliaser left the purchased 
lu.rse at livery witfi the v.'ndor. and it w-a« held that 
lie had received it. So. if tliird parties (f.y., wliaifrnj^ers) 
li«>ld the L'oods. if the vendor and purchaser a^yree 
lo-ether that they are for the future to be held for'the 
l.itter. receipt by him takes ])lace ; if this third party 
I- a bailee, or other at'ent. his con.sent is necessarv ; if 
lie is not. the mere puttin-r the jroods at the pnrchaser's 
ilisposal i.s sufficient (m). 

UijUimlf V. WhUthou.,: (iH(tt)). 7 Kast. -,.-.«: <;.,r,l,„r v <lr<,„t 
I"*.'-).-'*'. B. (\.s ) 340. 

>li) Mhott ,(■ (U>. V. WoUy, I l8'Jo] 2 Q. 15. !I7. 

(*■) Taylor v. Smith, \ I.S03] 2 Q. 15. V,r,. 

\k) Set; pn^i p. 27»i. (/) \\m\). I 'launt. I.-.S. 

l^n) Install v^ /i« „ ( I S24 ), !{ H. A C, m -. Ta.sln, y Tunur 



Thk Sale of (ioons. 

■ I ' 

It tnav hjipptMi tliiit tho things sold ;ii«> at the timo 
ill tlid posstissioii ol tho hiiycr himself -^.//.. an iinent 
may desire to luirchiise the ^oods in his own possession. 
Xotwithsfiuidiiij; this, tlieie can h(> receipt ])v him, 
and anv act done hy him which is inconsistent with 
his rights nnder ids former ,dnd of possession will 
amount to a receipt (n). 

Vaiuc i>f tjo or Upirnrds.—M the value is aetuallv 
Clo the statute applies, thouudi at the time of contract 
the value was unciMtain and was left for future con- 
sideration. If the transaction as a whole involves 
i^oods beyond this value, tlie fact that individual items 
are below it. will not afTect the case. Thus, if one ^oes 
into a shop and buys various articles, the vahie of which 
in the auifre^ate amounts to. say, tl(» Id.v., the ccmtract 
is within the section of the statute (o). 

The Memmuid'ini hi U'n'ling.—Tlm has already bt^en 
dealt with. dtik'. {)p. G (/ wy. 


(i) The Rights of the Buyer. 

The rights of each j)aity correspond to the duties of 
tiie other : it suffices, therefore, to deal with the liuhts 
of each. The buyer's ri-lits fall under two heads : he 
i.s entitled to delivery, and he is entitled to have anv 
conilitions and warranties observed. 

(/() Kilrin V. DudjhUi (18{i j. 1 Q. U. '^02. 
(o) Bdhlnj V. hirkfr (l82;{). 1 H. ^t < ' ' 

Rights of Buyer. 



Dclivorv is dcfiiitMl in tlio Art as the " voluntarv 
iiiinslcr ot {)()sst'ssi(Hi from one pt'ison to anotlier '" (f). 
The vendor must nu>.k this delivery as in the contract 
(it sale may have Mjon iii;re.'(i (y,. Such deliverv does 
not involve placi ; rhe huye,' in actual possession ; 
it may l)e construct.vr. as \)V luindin^ to the buver the 
kev of the warehouse in which bulky i^'oods are stored, 
Ix'cause that etlects a transfer of control. A^ain, the 
-(■Her may a,<;ree to retain physical possession of the 
unnds. hut ou terms which chani^e his possession from 
tkit of owm>" to that of bailee. The transfer of a bill 
III lading is a synd)olic ueliverv of the ^oods {r). \i the 
■^oods are in the posst^ssion of a third person, there is 
no delivery by the seller to the buyer, unless aird until 
>urh third person acknowledues to the buyer that he 
liolds X.\w ^oods on his behalf ; but this rule is not to 
atTect the operation of the issue or transfer of anv 
document of title to ^oods (s). Ihe vendor nuist, in 
the absence of special a'.;reenient, deliver the goods 
upon i-.ayment or tender of the price {t), or if credit is 
allowed he inust deliver at once ; but in the latttu' case, 
it the buyer becomes insolvent before he <)ets actual 
possession, the vendor may retain the ooods («), and as 
to future deliveries Mellish, L..T., said : " The seller, 
notwithstandinu he may have aureed to allow credit for 

(/-) S. G. A., 8. 02. (q) Ihid., 3. 27. 

((•) See IhihUn City DidUhr.i Co. v. Dohiriy, [1914] A. C. 823, 
wiicii- tile authorities on cori^tnirtive dolivery aro reviewed bv 
Lord Atkinson. 

(v) Ibid., s. 2!) (3). 

;.';. //.;.■.',, 9, ;?S. 

(») Hloxam v. Sanders (1825), 4 B. & C. at p. 948; and see, 
" i.icii " and " vSto|>]>iiire in Tnni-^ilii," pp. 27<> et .-fq. 




fe !■' 

i^ li 


Thk Sai.r ok (^oods. 

the uoods. is not bouinl to deliver any more gootis \mder 
t.!ie coritfiict. until the price ot t he t^oods ni»t yet delivered 
is tendered to him " (jr). 

Tholl,^'h the vendor is bound to deliv«M\ "ae cannot, in 
the absence of aiiieement to do ho. be compelled to 
eairy or send tlie unods to the bnyer. Deliverv takes 
place if the vendor allows the ^oods to be taken ; but it 
is often aj^reed that the vendor is to brinu the t;oods to 
the buyer, in wluch case the special terms agreed upon 
must be fultilhHl. Authorised delivery to a conjmon 
carrier is prima facie delivery to tlie buyer (y), but if 
the stiller agrees to deliver at a fixed place, the carrier 
who takes the i;(»ods there is auent tor him, and there 
is no ilelivery till their arrival (a). 

Where i^oods ar(! deliverwi at a distant place deteriora- 
tion necessarily incident to the course of transit will 
fall on the buyer, thouuh the seller a!.'rees to deliver 
at his (.wn risk (h). but loss caused by nej^lect of ordinary 
precautions by the seller nuist be made good bv him (r) ; 
thus damai:;e resulting Irom (tmission to make a j)roper 
contract with the carrier will ])iima facie fall on the 
seller (d). 

Wberi' goods are deliverecf to a buyer, who fias ju)t 
previously examined tlu^n, he is entitled to a reasonable 
opportunity of exatnining them for the purpose of 
ascertaining whether they are in c(ynformitv with the 

{x) Ex parti Cltnlmirs (I87;J). 8 (Jli 2!il. Delivery may be due 
eonditionally. In tliat case tlic i>arty wlio rlesires to enforee'it should 
;;ive notice of the fiillilment of the conilition [AninUui, v ln<olr 
(1849), 14 Q. H. 728). ' 

(//) S. (}. A.,.s. :J2 (i). 

((/) huiilup V. Lumlxrt (18.'{8), (J CI. & F. »iO0. ti2l. 

(6) S. G. A., s. 3H. 

(c) Vbirk; v. Hiiichiiis (1811), 14 F.atit, 475 

(rf) S. (i. A...«. :»2 (2). 

lJi(;iiT.s (iK I5ivi:i{. 


rniitiiut, iiii.l imlcs.s othtuwisc a-i(H'«|. wJii'ii tlic .seller 
uiuld.s dcli\ IV, Jie is bound, on re(|uest. t(» all'oid the 
I 'liver bueh reasonable opp(»it unity of exaininin-^ the 
uodds (e). 

Wlicn ^oods are si'ut by sea, the seller must fjive such 
iK'tice. to the buyer as may enable him to efTect any usual 
insurance of them dmiw^ their sea transit, otherwise the 
uoods sludl be deemed to be at the lisk of the seller (/). 
This aj)])lies to a sale under an f.o.b. contract. althouj.;li 
ihOivery is complete when the ^oods are put on 
liiiard ((/). 

The place of delivery is, apait from any express or 
implied a;:reement, the seller's place of business, if lie 
have one ; if not, liis residence ; though if the ^oods 
s(.ld be specific -;oods which to the knowIed<,'e of the 
parties when the contract is made are in some other 
place, then delivery should be made at tlie place where 
the Hootls are located at tlie time of sale (/<). Where 
the seller is bound to sentl the -^oods to the buyer, and 
no time is fixed by the contract, he must deliver within 
.1 reasonable time [i). Demand or tender of dchvery 
must be made at a reasonable hour ; what is a reasonable 
hour is a tpiesticm of fact {k). 

When delivery is made it must be of the exact 
oiumtity. and, if too much or too little, the buyer mav 
K'tiirn the whole, lu llarl v. Mil/a (/). two dozen oi 
wuu! were ordered, four dozen sent ; it was held that 
the whole four dozen could be i(!turned. The buyer 

(' ) S. a. A., a. 34. And sec poxt, n. Ml. 
(/) S.G. A.,a. 32(3). 

If/) ii'iiMe, Son.f ,ir Co. V. I{o.iLnbcr<i d- i'ioiui,H'JUi\ :iK H 743 

(/() !S, <}. A.,s. 2!»(l,l. "-J • > 

[I) Ihiil, s. 2"J (2). 

(k) Ibid., s. 24 (4). 

{I) (184(J}, 15 M. ii W. 86. 


TiiK Sai.i-; ok (JiMii),- 

if i 

iiiiiv ictiiiii llii- niiods iiicliulcd ill llic »((iiti;i 'i' ln^ 

iiiiiy iicn'iil I III'. wli(il(i (i''liv('rv. In this casi utnr is 
virtually a m'w <niiti;u't, nvA hi' must pay lur tlu' 'jiiods 
ili'li\t'it'(l ill excess at the cc.utravt rate (in). Frci|ueMtly 
the CKutiaet, in naiiiin^ the (luaiitities, iiirjudes suine 
such t^Kpicssi.iii as " say abmit," "' more (»r less,"' etc., 
and tlie (dlVct ot this is to allow in favour ol the seller 
;i reasonable variation between the contract ((uantity 
and th(^ amount (h'lliverc^d. Each case st.uids by itself. 
I)ut the following are fair exani[)les. In McCoinid v. 
Murph;/ [it) the contract was for " all the spars manu- 
factured by X.. say abcjut GOU, averanin^ sixteen 
inches "" ; 19(3 wer«' tendered of the specified kind 
jiiid measurement, and the tender was held j;o()d. In 
Morris v. Leoison {»). the contract was for " a full and 
"oniplete cari,fo, say l.UK» tons "" ; the vessel would 
take 1.2 10 tons, and oidy 1.080 were provided ; it was 
(hnifled that, under the circumstances, this would not 
suffice; on the other hand, in Miller v. Bornt-r (p), 
where the undertakini; was to h)ad a '" car^o of ore. sav 
about 2.800 t.o!is." the cliarteriu- satisfied the contract 
by toadinn 2.8 fo tons. althou;.:h the capacity <»f the ship 
was 'jicatei : the absenc<> of the words " full ami 
complete "■ leadiiiL; to an o[)posite result. 

Jiut words (tf quantity may be meiely words »»f 
estimate and not of contract. Thus, on thi; sale of the 
■■ nMnaind<'r of a car;;o (moic or less about) ri.KKf (piai ters 
wheat, thi^ buyers were held bound to accept r>,.'>74 
([uarte,rs, on theurouiid that therci was a sale of tin' whole 
remainder, whatever tiie (piantity nii'jlit lie; theselhus" 

!/"! S. I :. A.. -. M>. 

{II) (ISTI) I,. I!. .-, I>. ('. i;o;!. 

(Ol ( ISTiii. I ('. I'. I>. I,-),',. 

I/)) lI'.HtUj 1 g. li. (I'll ; 5 ('(Mil Cii^. 17.-). 

JtK.llTS Ol' Jil VKK. 


1 iilhitt'iiil cstiiiiali- not ;ifT(!ctiim l\n\ nioauiiit; ol the 
unvciiiiim word •• ronuiiiidci " (7). 

Ill tlni iihsciicii of ann'ciiioiit to llic contijiiy ;i f)ti\('i' 
1 iuiuot bo c'oiiipL'lk'd Lo lake dclivcrv l»y iiistidrrieuts (r). 

Conditions and Warranties. 

( oiulitious jiud wairautios jin; ropreseutatio i.s iiiado 
ill icJatioii to tlio mbject-iiiatter of the contract. A 
condition is a representation that a thiiiLi is, or that a 
Ihini,' shall be. on the truth of wliich t!ic existence of 
the contract may depend, and it uives a rii;ht of rescission 
to the injured party if it be falsified. .\ warranty is an 
a'iieenient collateral to the main purpose; of the contract, 
tjio breach of which yives rise to a claim for damages, 
l)ut not to a ri^ht to reject the i^onds and treat the 
contract as repudiateil (s). 

It is not every representation relatinu to the subject- 
matter of the sale, which amounts (uther to a condition 
or to a warranty. Mr. Chalmers, in Jiis book on the 
Sale of Goods Act {I), points out five distinct forms of 
n^presentation — viz., (I) a mere expression of opinion 
or mere commendation by the sellei' of his wares, wliich 
uives no rij^lit of action to the person deceived ; (2) a 
warranty : (;'>) a condition; (-i) a lepresentation made 
before the formation of th(- contract, and which is false 
and fraudulent, uivinji the auizrieved party a right to 
ilainages, and in many cases to rescission : (ft) a repre- 
><'ntati(ni creating an estoppel, the truth of which, 
therefore, may not be denied by the maker. 

It may. however, be liifficult to determine whether 

(■/^ Re llairi-oii ,{■ Mick.i Lamhf.rt, [VMl] I K. H. 7.'>.'>. .See «ls., 
T(h!'itt.s Bros. \. Smifh. r.\ T. L. R. rm, C A. 
ir) S. (J. A.. -■. 31 (1) 
{■•)} liiil.,s. (i2. (t) I'a-zcs 35, 3ii (7th (.il.;. 


MK S.\I,K «»| (;»M»|».s. 


■''i.'|.ir,.n.l..l,„„ Miadcln 1 1,.- vci,-!... ul llu- ti.n.- ..1 ...1., 
H.iiouiits 1., a special toutiuct .,t WHiiuutv. This .h-pnids 
•<p.m the of th.- ,ni,ti,..s t.. l.o ".h-ducT,! l.o.u all 
III.' idovu.iL ,,le.ic,.. un.l th. <ircun„stanoo Miat tlie 
ve,irl.,r assunios to ass.-M a fact of whi.l, the i.uifhusor 
IS imionint. tlu.,„h vahuhU, as ..vuleucc ol' i„t,mtifm. is 

lint oouclusivo of tlu' (lUfstioTl (>(). 

Wlu'tluT a .stipulation in a contract of salt; is a con- 
•lition or a, warranty in each case on tlic con- 
■stnu-t.on ol the contract (x). hut a stipuhition as to time 
"I payment is nr.t a cmdition unless a (iitfVrent intenti.m 
Hl.pears from the terms of the contract (.y) : a stipulation 
"»'t^■ !)•• a con<liti..n. thou^di the parties have in the 
contract termed it a warrantv (,/;). 

OodUions. -These nuty he express or n.av he i,n- 
phed. Express are wliich tlu; parties 
iaake m so many words (z) ; i.nplied con.fitions bein- 
sucJi a.s tJie law mcorpoiates into the contract unless 
the parties stipulate to the contrarv. which 
are usually implied may be expresslv .lisdaimed hv 
aureement (a), or they ,nav be impliedlv waived Thus 
when the express terms are inconsistent with the 
existence ot conditions usuallv implied, the in.plication 
.s defeated (h). So als., custom n.av nei^.itive a con- 
.l.t.on usuallv im],lied (a). On the other hand, custom 
fiiav annex an implied warranty or condition (r). 

(«) Hulh.tS,,o,o,,, .t- rv. V. HavUchn, [imii] A. C. ;]o 
merely hav„., of H iMrZ^J':. Sr^'^TillMi^^^rS;^^'^ 



Implied Conditinus.—Thii oidiuaiv rule is that con- 
.litioiis and wariantitvs arc rutt implied ; the buyer must 
iiiiil<»! express sti[)i;hitioiis. or take his chance : mmil 
■ii>/i/<>r. But tlicio are many impfntant exceptions to 
I Ins provided by the .Sah; (,l Goods Act. 18i):{, vi^. : 

(a) Vonditinu of Tiflc.-Tho. seller imjiiiedly iinder- 
i.ik<>s that, in the cas(! o[ a sal<\ he has a ri^'ht to sell 
!lir :;oods, and that in Mu; case of an ai^neement to sell 
lie will have a ri;,dit to sell them at the time when the 
property is to pass (d). 

(!•) (h> Sale <>f (roods % Dismplioti. Thv.w, is an 
iphed condition that the ^oods shall correspond to 



!<■ description, and if the sale was also 1 

,1 CO 


)y sample, 
ndition that tlie bulk shall correspond to such 
iption. whether it corresponds with the sample f»r 
nnt(c). Thus in Xic/iol v. aodls{f). -refined forei-n 
i.ipe. oil. warranted «»nly equal to samples." was sold ; 
I hi- oil, though erpial to samples, was not " rehnt^d 
loivi-n rape oil." and the court decided that the cou- 
'lit i..ii was unsatisHed. It may in some cases be difficult 
lo distini^uish a description from a warranty, but in all 
« ases where the purchaser has not seen the floods and 
Itiiys tluMU relying on the des( ription al,/ne. wfietiier the 


Is be specific or unascertained, there is a " contract 
lor th»! sale of i^oods In- description "" {(]). 

If uoods are liou'^ht by description from a seller who 
dt'ais in -(»ods of that description (whether he be a 
manufacturer or not), there is an implied condition that 
fhi' goods shall be of merchantable quality; provided 

('/) S. (1. A., s. 12(1). 

(/) (18')4), 10 Kxch. J!»l. 

!<7) Vnrlnj v. Whipp, [I<H)OJ 1 Q. B. ola. 

(<•) Ibid., a. 1.3. 




i 1 


\i I 


Tiih; iSale ui Uoods. 

Iliiit il (li«' hiiytu iias extiiiiiiuHl the jioods, tliciv .slinll 
he iio iiuphi'il ((indithiii us rtiifjinls (h'hicts wliicli .sucli 
i'Xiiiiiinatiou ()ii<;ht to Jiavo nnouleil (A). TIk! hiiy«M- is 
nut i)i)iiiul to iiKiii any iti (mhn- to make tlic 
;^oods meichautahlo (/). 

(c) Goodti WaiUed for a Farticuhtr Purpose. —Wlieia 
the huyor expressly or by iin[)Ucatiou makes known to 
tlie seHer tlie particular piupose for wJiich i^ouds are 
rocpiired, so as to show he ?eUes on tlie seller's skill 
or judLiiiieiit (except in the cases mentioned below), 
and tiie seller, in oidinary course, is accustomed to sell 
uoods of the description in (luestion, there is implied a 
condition that they are reasonably fit for the intended 
purpose {k). "' A manufacturer, who agrees to supply 
L^oiids to order, knowinii the purpose for which they are 
rc(piired, thereby impliedly undertakes to siipplv goods 
Ht for tht! ])urpose in view '" (/). Thus in Dnunmond v. 
Van Ixt/i'ii {»i), cloth manufacturers obtained an order 
to make worsted coatings of a weight and (pialitv e(|ual 
to sample, and they knew these W(Me intended to be 
re-sold to tailors. The stulf supplied was eijual to 
sample, but being " slijipeiy.'" it was unmerchantable 
for the purjxjse for which it was intended to be used ; 
this defect not being discoverable by anv ordinary or 
usual examination of the sample, the buvers were 
allowed to refuse the goods. 

The particular purpose for which the goods are 

(/t) S. (;. A., s. 14 (2). Sfc » /■(« V. Halt. [llKKiJ I K. J5. (ilO. 
(»■) Jackxon v. Hola.r Motor, dc. Col., | KMOl 2 K. H. !)37. 
(/fc) S. G. A., s. tl (t). 

[i) Lord Mai N.MiliTbN 111 Diiimmond v. Van Imjiii (ISST), i'2 
App. Cas., at p. 29."). 

(m) (1887), 12 App. t'lw., 284. 

l{lt;ilTS (M' Ul'YKi: 


ii'i|iiiit'i| iiiiiv l)« niiwlc kiKtwii to tlio. s^iIKm' l>y tlit; 
i<'ntt;iii,s«d tU'scriptiou of the articlo, if (hat description 
|t<iint.s to OIK! particular purpose only («). TIk; implitril 
■^-lulitioii extends to latent defects, e.g., where milk 
cnntains disease ;;erins, the existence (»f which can oidy 
i»f. discovered by proloni;ed examination {o). The ride 
is subject to the followinif exceptions, and there is no 
implied condition as to quality or fitness : (i) if the 
purchitser roli3s upon his own judgment, and not upcm 
that of the seller ; and (ii) on the sale of a specified 
article under its patent or trade name (/>). However. 
• ncM in the latter case the ct)ndition implied by s. 14 (2) [q) 
.ipplies, and the goods must be merchantable (r). A 
■■ trade name "' must be acquired by user, and the 
question whether it has or has not been so acfpured is 
on(i of fact (r). 

(i) tinle by Sample. — There is an inqjlied condition 
(1) that the bulk shall correspond with the sample in 
(|uality (.s) ; (2) that the buyer shall have a reasonable 
opportunity of comparing the bulk with the sample (s) 
l)cfore acceptance {t) ; and (3) that the goods shall be 
free from any defect, lendering them \mmerchantable, 
which woidd not i^ appaient on reasonable examination 
of the sam})le (.s). Sale by sample does not of neceisity 
t;tk(^ ])lace whenever a sample is shown ; sale by sample 
takes place when there is a term in the contract, express 

(") I'li,.,! V. iMst, [1903] 2 K. B. 148. 
(o) Fro.H V. AylcM>urij Dairy Co., |I9U5) 1 K. B. tiU8. 
U>) S. G. A., 8. 14 (I). 
(7) .4nfe, pp. 21(5, 2()ti. 

[r) I'ri^fo! Tmmivay.i v. Fi:>! Motor.-, [19101 2 K. B. 8;!i. 
I-) S. <i, A.,s. 15(2). 

lO I'l.ue (if (Iciivfry is, prim facie, the place of inH|)«;ctiun {P!;rkiru> 
V. i>'f//.[l8;)3j ! Q, B. ift3. 


; li 

Hi I 


The Sale of Goons. 

'•I- iiiiplit'd, to tliat e«lett(«) ; tlic wliolr c.f the circum- 
Htaiuiv> iimst l)« l(,()k(!(l t(.. •• The ollke of th.! .s.imjjl,. 
is t.. picsent to the eye tlie real meauiiiji and intention ol 
til.' parties with lej^'uid to the -subject-matter o[ the 
contract which, <.wiu^ to the iriii)erfection of lanMuaoi;, it 
may he diflicult or iini)ossj|.Ie to express in words. ^The 
saniphj speaks f(.r itself. But it (annot he treated as 
sayin- more than .such a .sample woukl tell a merchant of 
the to which the buyer belon^is, usinu due care and 
ilili-ence. ami appealin- to it in the ordinary way and 
with the knowledge po.ssessed by merchants of that 
at the time. No doubt the .simple might be made to 
■say a -^rcat deal more, rulied to pieces and examined 
by unusual tests which curiosity or suspicii.n mi-ht 
■sUHjrest. it would doubtless reveal cverv secret of its 
c(mstruction. Hut that is not the way in which 
buMuess is done in this country •' (r). 

Wominfics.—A warranty, like a condition, mav be or implied, and if express may be made at the 
time of niakin- the contr;i,t of .sale, or afterwards, but, 
.subject to this, tlnit il the warrantv be made after the 
.-.Muplotion of the coutracf, it is in itself a cntract. au.l 
re.pures either t.» be under .seal or to be oiven for -ood 
consideration (/r). If the contract itself be reduced 
into wr.tini:. a lepresentation intended to amount U, a 
warrantv and made contemporane.msly, canm.t be -iven 
in evidence un!<'ss it be in writiic.,' (./•). 

('/) 8. <J. A.,.s. 1.-, (I). 

(') Lord Macna.jhtex in Drumimmd v. Va,i Imnii MSSTi I- 

("•) Koiicorlii\\T/ioiiw.iHM2). 3y B '>34 



Irnpli.Ml warrftntie-s aro th<' fixroption. tho riilo heinj^ 
f'lirnt emptor, imd rvon wlioii warranties are implied 
l>y law. the implication may (as in the case (if a con- 
dition) be rebutted by the usa^e of trade or tlie a^nee- 
iiient of the parties {//). and any express warrantv 
iticonsistent with any im[)lied warranty will nejiative 
the latter (2). 

The warranties implied nnder the provisions of the 
Sale of (Joods Act. IHJK'l, are the following: (i) An 
implied warranty tliat the buyer shall have and enjoy 
ipiiet possession of the ^oods («) ; (ii) an implied 
warranty that the <,'oods are free from any charge or 
iriciimbranre in favour of any third i)artv. not, declared 
or known to the buyer before or at the time when the 
( ontract is made (b). 

Under certain other Acts the implication of warranty 
is enacted. Amonirst these may be noted the ]\ferchan- 
dise Marks Act, 1887 (c), which by s. 17 provides 
that -on the sale or in the cimtract for the sale of 
.iM\' i^oods to which a trade mark, or mark, or trade 
description lias been applied, the vendor shall be 
(huMued to warrant that the mark is a <,'enuine trade 
mark and not forced or falsely applied, or that the trade 
description is not a false trade description within the 
nieaniuii of this Act, unless the contrary is expressed in 
some writim^ signed by or on behalf of the vendor and 
tlelivered at the time of the .sale or contract to and 
nccepted by the vendee." Amonsrst other statutes 

(//) S. G. A., s. 55; Coiiilat v. Mi/ham. flflUl 84 L. J. (k. b ) 
il2o3 C. A. '1 \ I 

(2)'s.'g.*A., s. 14(4). 

{a) Ibid., s. 12 (2). 

[h) lhi<l.,H. 12(:<). 

(< ) S^-e alsii / pp. (ill (il:!. 


T(iK S.M.i: OK (looiis 

piDviiliii.; I',. I iiii|tli<>i| wivriiinti.'s with loijaid t(» « frtHiii 
classi'.s (if ■;,..i(l.s (MO f!ii> Aiiclmis ;iii(l Cliaiti ('ul)lt'.-i Act, 
l>^!»!». s. -2. iui.l til." I''..|filis.'rs and Kecaia-; Stiills Act, 
I'Hm;. s. I. 

Apjirt lioiii WiiMjuity. a porson M>llitiv -oods lie kiinws 
to l)t! diiii^tMoiis. in cast's wIhto tin! hiivcr wmild pic- 
sinnablv l»t( i-tioraiit <>l' the tiaiivfr. is iindor a diitv to 
warn tho Imvor that special can- is nt'ccssaiv. and in 
dofanlt of so doin'i. the seller will he liahie in <laina-os if 
injiirv results (d). Tlui remedies for hreach of warrantv 
and l)reach of condition are dealt witli, jmst, pp. 'iT'J, 'll'.\. 

Rifjh's upon Brnir/i of the Cvtitrnct (c). 

Retimln for .\'on-drliiYri/. -When the property in 
the ^oods has not passed to the })nyer(/;. his renuMh- 
for nou-(h!liveiy is an action for dania^ics. and th(! 
dania'ies will he the estimated loss directly and naturally 
resultiriL'. in the ordinary course of events, from the 
seller's breach of contract (/y). Where there is an avail- 
able market for the <j;oods in (piestion the biivei' is 
prima facie entitled to recover the difference between 
the contract piice and the market price at the time wlien 
they ou<^ht to have been delivered, or, if no time wa.s 
fixed, at the time of tin', refusal to deliver (//) ; l)ut the 
purchaser is only entitled to indemnity aj^ainst loss (i). 

(d) Clarhi V. Armiy a„d Xuvi/, dr. HtKitty, (liH>3l 1 K. B. l,')*). 

((1 See the reiiiiuks on " Bkkach of ContkaVt," unk, pp. 72 
i.l dii/., which iiif, ill tlif iii-iin, applicable to the pre.sent '<ubiert 

{ f ) .See pati, p. 2Sti. 

(f/) S. (i. A., s. 51 (1), (2). 

(/() Ibid., 8. 51 (.1). 

(1) Werl/ieim v. Chicniitimi Pulp Co., [1!>II1 A. C. ,'{0I. This was 
an action for dekvvil ileliveiy, not for non-di'iivciy. As to the 
(lifferenee. hco \\ iUiiinix Hro^. \ K. T. .h/iiii. | l'M4] \\ (• _ „f ., 522 
])i r LuJil I'lNKui.N. 

'jtm HP 

RinilT.S OF FiUYER. 


It tlif prtipt'itv in tlit> u<hm1s lim pnssj'd. '■' »' l»uy«'r (an 
sin« for wiiiu^liil »l«'Uuition rtiul fnr divniiiucs for the loss 
>iilTt're(l owinj; to deprivation of tlio chiittt'l. TIk*. biiyo.r 
(iitmoti dtMntiud coriipensiition for extraordinary loss. 
\inl(ws th« other party liad notice of HjxMial facts, which 
r.Midered the h»ss the hkely result of faihiro to dehver {k). 
Ill flnrne v. Midhind Rail. Co. (/), the plaintiil' had au 
nrder to fulfil, tor which, if completed hy a certain day, 
he was to leceive an extiaordiuary price ; he ^'ave 
notice to the defendants that the jioods wotdd be thrown 
on his hands if not delivered by a certain day. but he 
did not inforiii them that there was anything; exceptional 
ill the njitiiie of the contract; owin^i to the dcianlt of 
the defendants, the ^'oods did not arrive, and it was 
in'ld that the iiieasme tif daniaL'es was the ordinary 
and not th<^ extraordinary Kkss. Jiut if the vendor 
tails to deliver in accordance with contract, floods which 
he knew were re(|uir(!d to carry out a sub-contract, and 
the bnver becomes thereby unable to carry out the 
same, the latter is entitled to recover from the vendor 
his costs, etc.. of reasonably defending!, an action ayainst 
him by the sub-purchaser (m). 

If the seller refuses to deliver, the buyer may brini; 
his action at once without waitinu until the time fixed 
lor delivery (n). If the atireement was to deliver by 
stated instalments, to be separately [)aid for. and the 
seller fails to deliver one oi' more instalments, it is in 
each case a question depending on the terms of the 

(k) C(rn/ V. Thwnes [rontrnrks Co. fiStiS). L. R. 3 Q. B. 18!. 

{I) (i^i'i), L. R. 8 (.'. F. 131. Thif was imt a casf of sale, but the 
piiiicipl"' applies. See also anlf. pp. SO, SI, 

(in) Aiiiiin V. Gnat Wi-Urn CnUkry Co., [IHlMt] 1 Q. B. 413. Sec 
also Hammond v. ii «.•<.« // ^iSSH). 20 Q. B. D. T'l, where the buyer 
recuvered like damages for defective quality. 

(n) .Anfi . pp. T'l. 77. 


Thr Sale of Goods. 

contract, whotlior tlie l)iiy«>r is entitlti'. to repudiate the 
(Mtntract, or has merely a riuht to dainaiies (o). 

Specific Pcrfnrmmice. — \Vher<! chattels are \ini(|ue or 
of peculiar importance, the court, on the buyer's appli- 
cation, may order speciiic performance of a contract to 
tloliv<M' them ; the jud<iment to this efliect may be 
unconditional, or upon sucli terms and conditions as to 
tlamai^es, payment of the price and otherwise, as to the 
ctiuit may seem just (p). 

Breach of Condition. — Uidess the buyer waives the 
ronditi<m. the bieach of it entitles him to rescind the 
contract, or he may, at liis option, treat it as a bicach of 
warranty, and claim damaiies (q). But in two cases the 
breach of condition nuist be treated as a breach of 
warranty unless there be a term of the contract, expiess 
or implied, to the contrary — viz., (i) if the contract is 
not severable and the buyer has ac( ej)ted the floods or 
])art of them ; or (ii) if the contract is for speciiic floods 
the ])roperty in which has passed to the buyer (y). 

Breach of Warranljf. — The buyei- may not on 
acccnmt of this repudiate the contract, but he may 
(i) set up the breach of warranty in diminution or 
e.xtinction of the price, and (ii) he may brinj,' an 
action against the seller, and claim damages for the 
breach. a he measure of damages for breach of 
warranty is the estimated loss directly and naturally 
resulting in the ordinary course of events from the 
breach of warranty (,s). In Bostock tfc Co., Limited v. 

(o) S. G. A., s. :!1 el). And si-i' unlr, pp. 7:{, 74. 

(p) Ihid., H. 52. (r) S. r,. A., .''. II (1) (c). 

(q) Ihld., s. 11 (I). (.■i) Ibid., 6. 5:{ (2). 

Rights of Seller. 


""."...* t<, he brewer! and the .oodwill of the.r 
,,„> (lA.nat,es w , The plaintiffs vecoveral 

- damage. ™"^- '^>; 1 „/4e .,o«d« spoilt 

,„, the .n.P"- -^ • ■' *;, „,,„ ,,eads of damage 

liv hem"' inixod witii n- xn i • i i „,„ u,. 

■o,.e held not to fall within the meagre a,d do™ Iv^ 

™,,.se<.tion. Uowevcr. dan.ase- for loss o t«e 


answered the wananty (y). 

(u) Rights of the SeUer. 

The seller is entitlocl to be paid, and unless otherwise 
a^l'd dlwv of the ,oods and payment of the pr.e 

(t) 1 1904] 1 K. B. 725. 

(„) Anle, I.. 80 ., K B 220. The Court of Appeal 

(,^) S. (''. A., 8. 53 (.M- 




The Salk of Goods. 

4 i 


; I. 

I, f I t 

are concuireiii conditions (z). The seller is also entitled 

to have the uooda accepted subject to the of the 

buyer to examine the i^^ooda, if lie has not previously 

done so (n). The terms of the contract may entitle the 

seller to payment befoi-e the buyer has had a leasonable 

opportunity to examine the j^'oods. Thus, where the 

buyer was bound under the terms of a c.i.f. contract 

to pay " net cash," the seller was held entitled to pay- 

ment upon tender of the shippinjr documents, although 

the jfoods had not reached their destination. But such 

a paymciitwould not affect the buyer's right to reject the 

goods, if upon arrival they should be found not to be 

i:i conformity with the contract (6). The vendor under 

an ordinary c.i.f. contract can effectively tender the 

appropriate dociuaents to the buyer, even if he knows 

at the time that the goods have been totally lost (c). 

Acceptance (d).~A buyer accepts goods when either (i) 
he intimates to the seller that he accepts them, or (ii) 
when, after delivery of the goods to him, he does any 
act in relation to them which is inconsistent with the 
ownership of the seller, or (iii) when, after the lapse of a 
reasonable time, he retains the goods without intimating 
to the seller that he has rejected them (e). Under 
ordinary circumstances a seller cannot compel the buver 
to return rejected goods ; he is entitled only to notice of 
the rejection ( / ). If the contract is broken by the buyer, 

(2) S. (I. A., s. 28. 
(rt) Ante, |). 2(iO. 

(b) E. Ckinetw Uorst Co. v Biddill Bm.^., [I!I|2J A. C J 8 

(c) Manbre Sacdiarinc Co. v. Com Products Co., 1 19591 1 K B 198 
id) Acceptance" to satisfy s. 4 {ante, pp. 2.w-2.-,7), i.s'not the 

same thiQg as •acceptance-' wliich connwls the buyer to keep tlie 

(e) S. G. A., 8. 35. 
(/) lhid.,s. 30. 

Rights of Seller. 


the st'ller acquires otlier ri»ilits— viz., the right to bring 
;ui action at^ainst the buyer, and, in some cases, rights 
;main«t tlie goods. 

(a) Actions against the Buyer. 

If the property in the goods has passed to the buyer {g), 
the seller may, if the buyer makes default in payment, 
bring an action for the price {h), or, if the buyer neglects 
or refuses to accept, he may bring an action for damages 
for not accepting the goods (i) ; if the property in the 
goods has not passed to the buyer, the action which 
usually lies, is one for not accepting (t). To this latter 
statement there is an exception— viz., that where the 
price is payable on a day certain, irrespective of delivery, 
and the buyer wrongfully neglects or refuses to pay the 
price, the seller may maintain an action for the price, 
altliough the prop'-'-ty in the goods has not passed, and 
the goods have not been appropiiated to the con- 
tract {k). The damages for non-acceptance will be such 
as directly and naturally result in the ordinaiy course 
of events from the breach, and, where there is an avail- 
able market for the goods in question, the measure of 
damage is prima facie to be ascertained by the differ- 
ence between the contract price and the market or 
current price at the time when the goods ought to have 
been accepted (l). 

When the seller is ready to deliver the goods, and 
requests the buyer to take delivery, and the buyer does 
not within a reasonable time after siich requcot take 
the goods, he is liable to the seller for any loss occasioned 

{g) Poft, p. 28(i. 

(h) S. G. A., «. 40(11. 
[i) Ibid., n. 50 (i). 

(k) Ibid.. 8. 49 (2). 
(!) Ibid., s. 50. 



I r 


Thk .-^ale of Goods. 

by his neolect or refusal to take .leliverv, and also 
tor a reasonable char-e for the care and custody of the 
^'oods (m). " ' 

Where the contract is to deliver bv stated instal- 
ments, refusal to accept or to pav for one or more 
mstahnents may entitle the seller to treat the contract 
as at an end, and sue as for a total breach, or it may 
,mve a ri-ht to sue only for dama-es arisin- from the 
particular default: the ri^ht of the seller in thi^ 
respect depends ujx.n the terms of the contract in each 
particular case (n). 




(b) Remedies m/(i{,tst Ihe Goods. 
The ri.uhts of an '" unpaid seller - (o) aj-ainst the 
-oods are -(i) Lien : (ii) Stoppaije in tmnsitn 

Lien ,s the riyht which a creditor has to hold goods 
ot which ho has possession, but not ownership, when 
the pnce has not been paid (;>). If the property in the 
goods has not passed to the buyer, the unpaid seller 
has not a r,,^d,t of lien, but a right of withholding 
delivery, similar to and co-extensive with lien (q). 

The unpaid seller may retain possession of the floods 
nntil he ,s paid or tendered the price in the followin.^ 
cases-viz., (i) where the -oods have been sold without 
any stipulation as to credit ; (ii) where the goods have 

(«) S. G. A., s. 37. 
(n) Ihifl.,H. 31 (2). 
(o) An "unpaid " seller is, f,,-- the purposes of the ..resent nart of 

8 38 nf '• s i h" '''"»«<''l»P»tly .lishonoured (S. (J A 

8. 38 (1) , .viler molu.les any ,K>rson in the position o -i sel , , 

;/KT'!i/;2, )" """ '" "'■"" ''"^ ^"" «^ '-'"'^ '- !•<- indllis;:;! 

Rights of Skller. 


Itecn sold on credit, but the term of credit has expired ; 
(iii) where the buyer becomes insolvent (r) — i.e., when 
lie has ceased to pay his debts in the ordinary course 
nt business, or cannot pay his debts as they become 
due (s). And if tlio i;oods have been part delivered, 
the unpaid seller may exercise his ri}j;ht of lien on the 
n^mainder, unless such part delivery has been made 
under such circumstances as to show an a;;reemcnt to 
waive the lien (0- It has been decided that if the 
seller breaks his contract whilst the buyer is solvent, 
that even then he will be entitled to retain the goods if 
t!ie buyer subsetpiently becomes insolvent («)• 

Lien is lost if (i) the seller ilelivers the goods to a 
cirrit.: or other bailee for the i)urpose of transmission 
to the buyer without reserving the right of disposal ; 
oc (ii) if the buyer or his agent lawfully obtains possession 
of the goods ; or (iii) if the seller waives his lien (x). 

Sfnppoijc in (ransitii differs from lien chiefly in two 
points : (i) it can be exercised only when the buyer is 
insolvent ; and (ii) only when the goods have left the 
possession of the seller. It is the light conferred on 
the unpaid seller who has parted with goods to stoj) 
them, on insolvency of the buyer, before they have 
ii'ached the buyers actual or constructive possession, 
and to lesume possession of the goods and retain them 
until payment or tender of the price (//). 

'Ihe general result of the stoppage is to restore the 
I i'^lit of possession to the vendor ; to place hiin, in fact, 

(;•) S. (J. A, K. 41. 

(.■<) Ibid., 8. 02. 

(/) Ilml. s. (2. 

(») Sec I (ill'!/ V. ()fihli;/(\Hi)\). Hi Q. H. !»4I. 

(X) a. G. A., 8. 43. (y) Ibid., n. 44. 

i- - 


f ,4 



^ '! 


Till!; Salic ok i;(»<)i)s 

ill u i)(.sit,i(.u .similar to that wlii.h Jio |,h.1 |,.,st by 
partial; with tlie .-..,„l.s. Tiio sah; is act tiieicby 
ivscin.lo,! (2). - It. tor iustaiue, the original vendcir 
.sell whou ho ought not, they may hiiu- a spetjal action 
H-aiiist him for tiie iixjuvy [tlie .sustain by 
.sucii wrongful sale, and lei'ovor damages to the extent 
ot that injury ; but they can maintain no action in 
which the right of property and right of possession are 
both requisite, unless they have both those riglits " (a). 

Tlie right is more than a mere lien ; '" it grows out 
of Lthe vendor's] original ownership and (h»mini<m. 
... If goods are sold on credit, and nothing is 
agreed upon as to the time of delivering the goods^the 
\mxdiio is immediately entitled to the possession, ' and 
the right of p().sse.ssi.m and the right of property vest at 
once in him ; but his right of possession is not absolut(^ ; 
it is liable to be defeated if he becomes insolvent before 
he obtains pos.session "" (6). 

The right can be exercised only against an insolvent 
buyer, the insolvency being a matter to be determined 
on the facts (c). The vendor mav take time by the 
forelock, and stop the goods before actual insolvency ; 
but if, at the termination of the voyage, or at the date 
when delivery is due, the buyer pr,.ves solvent, the 
vendor must deliver, and may further be liable for 
expenses {d). 

It is only durhig transitus that this right of stoppa-e 
exists; it is ther.^f<,ro important to dcline when the 

\ lUS), 1 ^ul. L. ('. i i-'ih ,■(!. I J,),. 77.> ,t x,ij, 
(II ) Ha\ Lii V, J., ill JJtoxiiiii V. SiiikIi is ( I .si-.") 1, l 15. jV: ( ' 'M | ■ 
ill) /hill at I). "Ms. 

(r) ■■ liisiilvciic.y '• i^ (liliiicil, «///(.. |(. 277. 
(«/) The L'<))i6tdntia (I807j. (i Hoi). Ad. It. ;!2J. 

""• V. Mason 
It |.. '.)HI. 

Jliuins o\- Ski.i,i;k. 


tiiiiisitu!^ boiiin.s tiud wlieu it «•ll(l^^. It is piuvidi-d by 
the Act tliat ^ooils .sliiiU bo deomcil to be, in travsilu 
Irmii tho tiiiu! when tiicy me delivered to a carrier or 
other bailee for the purpose of transmission to the buyer, 
until the buyer, or his aj-ent in that behalf, takes tlelivery 
oi them from such carrier or other bailee (<;). 

In every case an inquiry nuist be made into the 
particular facts, as the question is really one of the 
intention of the parties (/ ) ; r./y., — 
Goods delivered to a carrier qua carrier transitus 

Uoods dehvered to a carrier qm warehouseman for the 
buyer— transitus ends. But not until the carrier 
ack-nowledj^es to the buyer or his a>^ent that he 
hoUls for him (</). 
Goods delivered to the buyer's servant— transitus 


Goods delivered to the master of the buyer's ship— 
transitus ends. If the ^oods are delivered to a 
ship chartered by the buyer, it is a questicm 
depending on the facts of each particular case 
whether they are in the possession of the master 
as a carrier, or as ajient for the buyer (h). 

When the buyer takes possession of the <j;oods away 
from the carrier (i), even ai^ainst the carrier's will, 
and though the destination is not reached l^-) 
transitus ends. 

(c) S. Vr. A.,s. 45(1). , ..,-.. 

(/) See remarks of .fEssEL, M.R., iu Mtrchunl Banking Co. v. 
Pluinix Bessemer St,, I Co. (1877), 5 Ch. 1). 205, -iUt; and of 
Matuew, .1., in B,th,ll v. ( 7(i»l (1S87), l!> (^ H. D. •>•>«• 

(</) S. a. A., s. 45 (3). 

(/() Ihid.. s. 45 (5). 

{[■) Low'loa (uid'Xorlh W,"!'!,, H,nl. t'o. v. Barthll (18t)2), / 
H. c>« N. 400 ; 31 L. .J. Excli. !t2. 



Thk Sale of Goods 

U S' 


UlKUi the canioi nr bnile. wroimfuUv refuses t., 
deliver the o,>ocls to tlu> buyer or his a^ent in thnt 
behalf— transit us eiuls (/). 
n the buyer or his a^^Mit in that behalf takes posses- 
su.n of part of the .^oods. the circumstances bein« 
such a.s to show an inte.ith.n on the i)art of the 
Ncudor to retain the .est, the ri^ht to stop m 
transit i, as to these remains ; if such as to show an 
agreement to give up possession of the rest, tlie 
I'ight to stop has gom; (//(). 
Two frnfer poiuts an.e here -what is a suHi.^ient 
taking possessum i and what is a destination i 

The buyer, accuding to one ccmcepti.m of con- 
structive possession, has it immediately the ^.,ods are 
doliv..,ed to a common carrier, or to a special carrier 
•ui.ned b> liin,, but if this is possession, it is not such 
^i. to defeat the right of stoppage. For this there must 
be actual possession. ..r " another kind of constructive 
possession by the vendee -,.r.. when the .oods liave 
been delivered by the carrier, and have reached the 
iHiuls ol an agent to the vendee t.. be held at his 
'I'sp'-sal' (n). Actual possession raises n.. diHh-nltv 
but it IS uiten har<l to state whether a deliverv is such 
jvs to o,ve a c.nstructive possession to the buver A 
leudmg .ase is that of Whitehead v. Anderson{o)- 
tl..-re the assmn..e of the bankrupt l.uyer went on 
boa.d a vessel on which was timber consigned to the 
buyer ; he touched it and told the captain he was there 
to take possession of the cargo, but the captain did not 

(/) «. (i. .\.,.s. 4.-)(»>). 
("0 Ibid., s. 4.< (7). 

ins Wlxv-TT r 1 ill A' ; / ir I 1 

{"} (lS4l'i, It.M. .^ W. .-,ls. 

liiiiiiTs ut Skllkk. 


.i-..nat to hold th«m on tliosc teniis. It was lield that 
no coiLstvuttivo possessiou uioso in the buyer, and tliat 
I ho ri^'ht <»f stoppa-^c did not cease. And ^{eneiaily, it 
ihf carrier does not hold the j^oods as aj;ent for tiic 
I nii«i;4nee, owin;^ further duties to him than those of a 
mere carrier, he cannot accpxire possession foi' sucii 
1 niisi;j;nee. If, however, he becomes, with his own 
.onsent, a storekeeper for the consi<;nee, he can acquire 
such possession. 

It is not difficult to say when the j^oods have reached 
their destination when they are sent direct between 
consijjinor and consi^'nee, but there is more uncertainty 
when the j^oods, though not yet arrived at th^ir ultimate 
point, have reached an intermediate place of vQnt—e.g., 
A. sends goods to London to be forwarded to Hamburg ; 
is London or Hamburg the destination ? Li Dixon v. 
B'lldwen (p), Lord Ellenborouoh stated that : " Tho 
-oods had so far gotten to the end of their journey, that 
they waited for new orders from the purchaser to put 
tluMu again in motion, to communicate to them another 
substantive destination, and that without such orders 
they would continue stati«mary," and this he considered 
ro mark an end to the transitus. Some recent cases 
illustrat(5 the point and support the above test. In Ex 
jinrtc Miles (7), an agent in England bought goods for 
ii Jamaica firm, the vendors being aware of the residence 
of the firm. The agent asked the vendors to send the 
Lioods to certain shipping agents at Southampton for 
■shipment by a certain vessel, and this was done. The 
" particulars for clearance "" were sent, and the vendors 
iisked tho shipping agents to "'forward as directed," 
ijiib the name of the consignee and the destination were 

(l>) (1804), 5 Ettst, 175, 180. (<i) (ISH5). 15 Q. B. i>. 3"J. 


?l i I I I 


TlIK S.\L|.; ui (;(M»i»s. 



i * 


• ■! 

•'""""""''•'^♦'•'' "ot. In- Mh. v.MHlors. iM.t l>y M.,. lM.v,.,-s 
'^^""<- H,:.l tk. IhII.s uI,., ,l..snil,.,| tl,. ,.s 
<'.n,s.,uur. Tl.. ...urt h.l.l. ,so Inr as n-Uu-.l to tl.. 
vni. .,1- ,s nulit uf stoppH.o. tliat t\u> tmnsitus ..ulcl ut 
Nnutluwnpton. Bkktt. M.R.. .sai.l : " As a .nutter ..1 
'"'H.m,, ,t is i„.p,,s,ibl, to sav that |tho shippi,.,. 
■i'-^<-»ts| rould pt-operly Imvo sl.ippe,! th. ...ods foi. 
•iHinaica without rcoeivin- fmthor ordc^rs as to the 
person to wlioni they were to «hip tlien. TJiey 
wore to .eceive directions from the purchasers us to 
the person to whom they we,e to sliij, then,, and the 
purchasers were to om.nunicate to then, another 

substantive destination Tlie case, therefore 

seems to me U. be within the authority of Dixon v 
Buldwen " (r). So in Kendal v. M<mhall («). it was 
deeded that wJicre ^'oods are sent by an uni>aid vendor 
to a forwardmo ajrent. who is instructed as to the 
ulterior destinati<m by the buyer, tJio ri^lit of stoppa-^e 
IS lost when they reach the a.^ent. On tlie otlier hand 
HI Jiethrll V. t%rk {/). the buyers purcJiased ...ods of 
the vemlors. wlio resided at WolverJiampton. and sent 
them a consignment note as follows : " Please consi-n 
th'> lo Jdids. hoHow-ware to the Darliny Domis. to 
Melbourne, loadin- in tjie Kast India JJocks. To come 
up at once." The buyers became insolvent and the 
vendors stopped the -oods. but not until thev Juul been 
J'ut on boanl the Darluu, /A-.... TJie question arose 
was the transit at an end i and the courts unauimouslv 
.lecid.MJ '• No.' Lord EsHKR. M.H.. laviu, down this 
Pnu.'.ple : •• U iHM.. tiie transit is a transit which has 

^^^n (1801). r, l^asi. 17.: „..i so,. rr,l,,, V. r/rt.o. (1H17), ■( C. B. 

(■) (iss:{i, II Q. i;. i». .( 

(t) (1887), 19 Q. iJ. 1). .553 ; ami (I8S8), M (^, U. D. (ilo. 

Kiuurs OF Ski-lkk. 


Imch (ini.sed either by the tciiiis of th»! joiitiuet. uf liv 
the (lirectiniis nl the pmchasei to the veiuhii, the ii;^ht 
<>\ sU)[>ihi'^ii in tninxKu existis ; hut. if the i^oods are not 
ill the hiiuds of the carrier by reason «'ither of tlie terins 
nl the contract, or of th(^ dircction.s of the piirclia.ser to 
ilie vendor, but aio in fran&ilu afterwards in consecjuence 
nl fresh directions ^^ivcu by the |tiirchaser f(tr a new 
iiiinsit, then sudi transit is no part of tlie orinimd 
transit, and tin; rii^ht to stop is ^'one ' (»/). 

There is no particular form of procedure recpured in 
tlie exercise of the ri<,'ht. Simple notice to tlie carrier 
is enou<{h, but it ninst bo ^iveu to the person actually 
in possession (c.f/., the ship's master), or if to an 
e?nph)yer of such person {e.g., shipowner), then in time 
to allow, with the exercise of reasonable dili<.;ence, the 
pcMson in charge to be communicated with (x), aud it 
lias been questioned whether or no there is any dnty in 
the shipowner to communicate with the master (y). 

Rights and Duties of Carrier.— Whciv ^^oods have been 
stopped in transitu, the carrier must re-deliver the j^oods 
to. or, accordinif to the directions of, the seller (x), aud 
I'll the other hand the seller comes \mder an oblij^ation 
to take i)(>ssessiou oi the <ioods aiul to pay the freight and 
;ill attendant charges thereon (z). 

liut although as between the unpaid seller and the 
earlier, the latter is entitled to be j»aid the charges due 
ill respect of the carriage of the paiticular goods the 

{») Si'c also /■.> parlf I'n.^i mtr ('liiim ('lii'/ I'o. (187! 
•">l>0: ^ '(«//. X V. 1,'iiilliiii (IHJ7). t) H. iV C. 422; Li/oiii 
(1890), 15 App. las. 3!>l. 

(,(•) .S. G. A., H. 4«. 

I//) /■;.<• /mrtt Fnlk (1880), 14 Cli. IJ. •t4t) ; 7 App. C'lis. 

(;) liijuth SS. Vo.,LUl. V. Curijo FUtt Iron (,V>.,[l!tl(iJ i 
C. A. 

h. I). 

'I III/ 


28 J 

I irf. 

I J' 

Tmk Sai.k o|. );.,nl..^. 

""" hav,, .„,|„„„,| „, ,.„,.i„„ „,„ ,„„„.,,„„,. ,,^ ,,^^^.^1^ 
t" lli,^ ,„.||,., ., ri^ht t.. »t.,|> m imiMlu („). 

' ' '"" ''I;' J"'lK"">"t ,n..lit.,r »h., ,.,.,., 1,;,! II,.. 

......iMi. N.-,d,..,M,o,,«i,,, ,,,,,.,, „,,,,,,,,„,,, ,,,,,^; 

oil,., , ,.„„,„„,(,.,. Ii,.t if „ d,„„,„„„t .,( ,i,|„ ,„ ,.„„|, 

..y.. a i„ii „i u,,i,„. ,,„, ,„.„„ |„„,„|| t™„„,.,,;,| ,„■ 
""'7'; ";""^'";» ""^ ■■'-.,„„„. ,„ ,„„. „.|,„ .,,,,, „" 

«".Hl f«,th »,,,! for val„aWe ,„„.,i,,e,.„,i„„. H,™ „ „ 
™,(»r »« b.v way „f »„|„ „,„ ,1,1,1 „f |i„„ ..,„i „ ,,„„ 

h tl„.,. te t,a„»f,.,. be „,a<le by ,h„ ve,.dc..'.„ 1,1 

"","".";''; "f" ■■•"■"■"»'«'l with tl,.. „, |„.,i„.." 

A 1 , ,a h,k t„„„l„,. by «y of „U.,|„. „f ,„„ ,,,K.,„:;;^ 

'•tie w,ii,H,.,.tti,.,,i.,i,t ,,,,,,,,„,.„ ,,,,,.,,,. ,;^ 


•'•y i-"i.«.ty m the ,„«i», „„. „,„|„,, ,„^,, ,.; ; 

Li. & ( n. \v(,io mdobtcd to II A- ( '„ . 

S;9'>7I iiul II K I' I , '"' '^'''''iiiit r.t 

lJi(){)(ii,\ , I,. ,v (n. Iicciiirio bankrupt, 

I") I llltl (I Slilli ,^ Sli I I Pr,^l„.l . f ,, 

(l>) Snnlh V. f,W ,J8()7). I (•,„„,,, .,^2 

RlOHTS f)r SKlJ.KIt. 


mil fin* iiii|)ai<i vtnulfir stoppfM the <.'o<k]h ; it was 
ii'iiili'tl tliat altf^r tli«' |)rtyin«'iit cil M. A ( u. tht^ stoppau*' 
\.i- uofMl. and tliat the vendor Iia«l a liyht to insist that 
II iSc <'ii. slidiild lirsf 1m' [ijiid (uit of tfic scciiritv utlior 
'li;iii till- hiukIs r(')»i»'s('nt<'<l l>y tin- l)iil <•[ ladiui;. and 
MiJit in the cast* only of insnffinnicy of valnc of .sncli 
nilici scciiritv should tht'y resort t(» th(^ s«'i uritv of th»' 

■ H.ds. In Kimp V. Fnlkif), Lonl liLACKBi'RN said: 

■ Tilt* unpaid vendor's riylit. except so far as the interest 
iiad passed hy the pled<;in«f (tf the hill of ladiny to the 
jiled-ee or the inortjiai-ee, whiciiever it was. enabled 
the unpaid vendor in etiuity fo stop in tran.sifu everv- 
tliiuLj; which was not covered by that pled;,'e. That was 
-I'ftled and has been considered law, or rather etpiitv. 
• •vt^r since the case of In re Wcstzinthus. and lias been 
.illinned in Spnldimj v. Ruding, and I have no doubt it 
i> very t^ood law u[)on that point." 

So far has the vendor's rijiht been taken, that it has 
Im'cm held that wliere ^oods have been sub-sold, but 
till' bills of la<liny not actually transferred, if the 
tiansitus is not ended, the vendor may stop them {(/). 

lie-sab of Goods subjected lo Hen or Stoppage in 


-Vs the contract of sale is not usually rescinded by the 
' xcrcise of the lii^ht of lien or of stopj)a<;e in transitu, 
it f(illo"'s that, as a rule, re-sale is not allowable. But 
it, notwithstandinii this, the unpaid seller re-sells, the 
new buyer acijuires a yood title as against the original 
and defaultinjf buyer (/«). In certain cases tin; unpaid 

(/) (1882). 7 Aj)|). f'us. 573; and sec SjiaMing v. Jiitdlm/ (I84r)), 
'■■ Bi-.iv. 'Mn; \'i L. ,1. Ch. 374. 

Un Kmip V. Fnlk ( 1882), 7 App. ('as. .'".7:!. 
(//) S. (;. A., s. 48(2). 


The Sale of Goopis. 

vendor ,.s entitled to ro-sell, vi... (i) whero the ri-dit 
H^s ex-proaslv reserved in the contract of sale [i) ■ 
11) where the .o.xls are perishable (k) ; or (iii) where 
the unpaul seller .ives notice to the buyer of his intention 
to re-sell, and the ],„yer does not, within a reasonable, pay or tender the price (k). In these cases the 
solle,. may re-sell and claim damages for breach of 

i! ■ 

Transfer of the Property. 

It is often necessary to detern.ine at wlmt exact point 
of ime the property in ^oods passes to the purchaser, 
and more as, in the absence of agreement to 
the contTarv and where neither party is in default, the 
nslc, as a rule, hes on the owner : res per, t domino (m.). 
The card.nal question when the goods are specific or 
ascertamed ,s, what is the intenti.m of the parties ? If 
an answer t. this can be obtained, the time when the 
property passes ^s fixed by that answer, for the intention 
of the par ,es governs the matter (,,) ; and where that 
m ention does not otherwise appear, the following are 
rules for ascertaining it : 

>S.fe 0/ ,S>cjy?o Chnttels.-ii) When a given spoci- 
ttetw/'^ unconditionally and in a deliverable 

of sale , e.g ,t I go to a shop and buv a certain book- 
on the completion of the bargain the book is mine (p)' 

(»■) R. (";. A..S. 48(4). 
(I ) IhiiL, s. 48 (.3). 

{in) //>/(/., 8. 2(». 

il ■ 

ip) Ibid., 9. 18, r. J. 

Transfer of the Property. 


Tlift seller may ho entitled to retain the thinj,' sold until 
he receives the price, but this ri>,dit arises from lien, and 
not from any ri^ht of property. " Where by the contract 
itself the vendor appropriates to the vendee a specific 
rliiittel, and the latter thereby agrees to take that 
<|ie(ific chattel, and to pay the stipulated price, the 
paities are then in the same position that they would 
I If after a delivery of {foods in pursuance of a general 
contract " (7). Thus, A. bought a given stack of hav 
tor a sum payable on a future occasion ; and it was 
held to be a sale pas.sing the immediate property (r). 
The practical result of this would be that the hay would 
remain at the risk of the puichaser. though in the 
absence of special agreement he couhl not remove it 
until he had paid the price. 

(ii) When the goods are sold specifically, but the 
seller is bound do something to them for the purpose 
of putting them into that state in which the purchaser 
is to be bound to accept them, that is, into a deliverable 
state, in the absence of circumstances indicating a con- 
tiary intention, the property does not pass until such 
thing be done, and the buyer has notice thereof (s). 

For instance, if the seller is to deliver the goods at 
a particular place, the property passes only when they 
are delivered there (t). So, also, if the thing sold, 
though specified, is not yet in existence, or is only 
partially finished, e.g., a thing to be made to order, the 
buyer obtains the proprietorship only on completion (of 
course, in the absence of agreement, express or implied, 

(7) I'ARKE, .J., in Dixon v. Yules (1833), 5 B. & Ad. 313, 340. 

(c) Tarlinq v. BaxUr (1827), ti B. & C. 3(50. 

(.s) S. G. A., H. 18, r. 2. 

(/) CocKBURS, f'..]., in Calnilta Co. v. fh Mattos (1863), 32 L. J. 

li i 

i! - 

.1 s 

I ' 




f 1 


Thk Salr of Goods. 

to tho ..mtrarv); e.f,.. in Chrke v. Sjmice (n), h 
aureed to build a ship. t,. he ,,ai,l f„r hv instalments at 
ponnds ruuu-Hlmt with certain stages in its hnildin- 
Iw.. iMstahnetits had been paid when B. heran.e hank- 
r-pt. and the point at issue was, to wliom did the 
vessel belong i An<l the court .stated that " until tho 
last of the necessary materials be addetl. the ve.ssel 
.s not con.plete. the thin,^ contracted for is not in 

''''''^''''' ^'^<l ^ve have not been able to find 

any authority for .sayin-. that while the thin.r con- 
tracted fo.- ,s not in existence as a whole ancfis in- 
complete, the oeneral property in such parts of it as 
are from time to time constructed .shall vest in the 
purchaser, except the above passa-^e in Woods v 
Russell (X). hi this particular case it was decided 
tJiat the payment by instalments evidenced an inten- 
tion to take and ojve property in the thinjr, so far as 
It was constructed at the time of pavment of each 
instalment. In a subsequent case, Parke, B.. said • 
A chattel which is to be delivered in futuro docs n<,t 
I)ass by the contract " (y). 

Tlie rule under consideration applies onlv if the work 
to be done upon the thing is to be accomplished before 
delivery, e.g., it will not apply if a vendor agrees to do 
certain repairs after delivery {z) -. and further, only if 
the something to be done is to be done by the vendor 
An agreement by the buyer to do something to the 
goods-and such is conceivable-^oes not affect the 
passing of the property. 

(«) (183(>}, 4 A. & E. 448. 
(X) ««••' tl.Ls case, (1822). 5 li. & Aid. 943. 

(y) Laidkr v. Jiurliii.ion (1837), 2 M &• \\ (Wc) a., i i, .i. 

is a question whether thec^AJno r/jah'; „.^ 'k f •'"/''7'' 

(z) bre Ur(av,.s v. Hipke (ISI8}. 2 H. & Aid. I3|. •'•*•"• 


(iii) Where arxythin-^ remains t«. bo done to tlie 
uo.nls, for the purpose of ascertainiim tlie price, as by 
nn.-hin-, uieasiirin-, or testin- the goods, where the 
jMi.e IS to depend upon th(^ quantity or (piality of the 
U.xkIs. the performance of these tilings with notice to 
the buyer shall be a condition precedent to the transfer 
"It he property, although the individual goods be ascer- 
taiiKul, and they are in the state in which they ought to 
l»t^ accepted {a). 

This refers most probably to anv weighing or 
measuring by the vendor, and is thus a partic'dar'case 
"1 lulo (ii); e.ff., in Simmons v. Swift {b), a specified 
stack of bark was sold at £9 5*. per ton, and a portion 
t hereof was weighed and taken away ; it was decided 
that the property in the remainder had not passed 
l)ecause it was to be weighed, and " the concurrence 
of the seller in the act of weighing was necessary." 
But in Farley v. Bates (c), the buyer was to weigh the 
goods at his own expense, at a machine past which they 
would be taken in transit : and it was decided that here 
I lie property did pass, and an opinion was expressed 
that if the weighing or measuring was to be done by 
tlie buyer, the property would, as a matter of law, 
always pass. 

(iv) \Miere the buyer is by contract bound to do 
cinything as a condition, either precedent or concurrent, 
nil which the passing of the property depends, the pro- 
lierty will not pass till the condition be fulfilled, even 
though the goods may have been actually delivered 
into the possession of the buyer ; e.g., if payment and 
delivery are to be concurrent and by mistake goods are 

(a) S. G. A., 8. 18, r. 3. (b) (1820), 5 B. & C. 857 

(c) (1865), 2H. &C. 200. 

!■ I 



nt i 



The Salk of Goods. 

delivered before payment, the j^oods may be demanded 

brick ((^). 

(\) WluMi ^ioods are delivered to the buyer on 
"approval" or on "'.sale or return ' the property in 
them passes to the buyer when (I) he signifies his 
approval (.r acceptance to the seller, oi' does any other 
act adopting the transaction ; or (2) if without giving 
notice of rejection Im retains the goods beyond a time 
uxeil ])y agreement or beyond what, in view of all the 
facts, is a reasonable time (e). 

If the buyer pledges tlie goods, he does an "act 
adopting tjie transaction "'(/). but the property will not 
pass if the goods are fraudulently pledged by a person 
to whom the buyer has delivered them for a special 
purpos.; whicl! is consistent with the terms of his 
contract and the ownership of the seller (g). 

Sale of an Unspecified Cliat'el.—Tlie contract is here 
merely an executory agreement, and until the goods 
are ascertained (//) the property does not pass. Such 
cases will include those wliich were described as 
" a bargain for a certain quantity, ex a greater (pian- 
tity"(?) ('.//., sale of so many t(ms of liav out of a 
certain year's produce. But where the -oods have been 
chosen out of the bulk, and being in a deliverable state, 
are unconditionally app)()i)riated to the contract, either 
by the seller with the assent of the buv(>i-. or by tlie 
buyer with the assent of the seller, tliat which was 
formerly a mere agreement to sell becomes an actual 

{(l) Per Uw \.VA , .J., lit Bishop v. Hhillito ( 181!)), i )'.. k AM ;}2"J n 

(e) «. G. A., s. Is. I. 4. 

(/) Kirkham \. Allniihnroiii/li. ||S!17| | {). |;. i'o| 

(7) It'/,,,,- V. (,•(//. [I<t05 1 2'K. H. I7-.>; I I'.MKij 2 K li oT 1 

(/') N. (;. A., s. iti. 

(0 (■•'illcU V. Hill (1834), 2 C. & M. o3U. 

Transfer of the Property. 291 

sale, and the property passes (k). U the seller sends 
notice of appropriation to the buyer and the latter does 
'i-t reply promptly, it be inferred that he assents 
to the appropriation and the property in the -oods will 
be deemed to pass on the expiration of a reasonable time 
alter receipt of the notice (l). 

A question of some difficulty arises, when it is required 
t.. settle who has the ri^ht of appropriating- sav, that 
A. orders of B. 500 pounds of a given kind of' su-ar, 
liere It IS usual for B. to select from the bulk the par- 
ticular portion of sugar bought, but it is not always sr, 
easy to determine. Blackburn lays down this rule"^{m) : 
'' UTien from the nature of an a.-reement an election is 
to be made, the party who is by the agreement to do the 
hr^t act. which from its nature cannot be done till tJie 
election is determined, has authority to make the choice 
m order that he may perform his part of the agreement • 
when once he has performed the act, the choice has been 
-nade and the election irrevocably determined, but till 
then he may change his mind " ; e.g., if the purchaser is 
to send for and take away a certain number of bricks 
out of a stack, as he cannot do this until appropriation, 
10 has the right t(, select ; if the seller is to send them, 
lie has the right of appropriation. 

In CalciUta Co. v. De MaUos (n), coals wc^re to be 
delivered by the defendant at Rangoon, and f.,r that 
i)iupose were shipped from London to that port • in 
accordance with his contract, the defendant gave the 
l»ill of lading and the policy of insurance to the company 
Lord Blackburn said : '^ As soon as De Mattos, in 

a-) S. (J. A..S. 18. r. .5. 
{/) l'i;fi«itnr» V. </i7roy, [1919] I K. M. 459. 
(w) miicklHnn on Sales CM ed.). n r.iii 
CO (1S03), 32 L. J. y. B. 322. 



I'liK Sale ok (iooDs. 


' ^ '1 

,S I 



pui.MiiUKO of tho stiimhitiout*, t,'ave the (•(»iiii)any the 
policy ami bill of ladiim. h« inovocably appropriated to 
this contract the l;oo(I.s that were thus. ship{)0(l. . . . So 
that from that time what had originally been an ajiree- 
ment to supply any coals answ(irin<; the description 
became an agreement relating to those coals onlv, just 
as much as if the coals had been specified from the firat." 

The above rules are those tjiat generally prevail, but 
ill many instances they are passed over in accordance 
with tlie intention of the contractors. •' Tiiere is no 
rule of law to prevent the parties in ceases like the present 
from making whatever bargain they please. If they use 
words in the contract showing [an intention] this inten- 
tion is effectual "" (o). In YoiDUf v. Matthews {p), a 
purciiaser of bricks sent his agent with an order foi' 
delivery, and the vendor's foreman declared his inten- 
tion of delivering wheuevei- he could get rid of a man 
who was in possession uniler a distress ; he then pointed 
to various clumps, consisting of bricks, some unfinished, 
sojne finished, as those from which the delivery should 
be made. It was decided, on these facts, that there had 
])een a sufficient appropriation, and that tlie propertv 
had passed. Erle, C.J., said : " The well-known 
general rule that the property does not pass to the 
buyer while anything remains to be done by the seller, 
either to complete the goods or to ascertain the price 
does not therefore apply to the present case. There is 
no doubt that vlie part.'es could pass the property in 
all the bricks, whether finished or not, if such was their 

So if the vendor retains a jus disponetidi, this will 

(o) Lonl Blackbuhn in ValcutUi Co', v. J)c Mattws, supra. See 
C<iMt V. riayjord (IST2), 1>. K. 7 Ex. 98. 
(/)) (18(J7), L. R. 2 C. P. 127. 

Sales by Auction. 


show an intoiition n(»t to part with the property in the 
■ioods till the happeninj^ of some specified event (q). 
•^onerally until payment of the price. Where j^oods are 
shipped, and by the bill of ladinj^ the floods are deliver- 
able to the ordei- of the seller, the seller is prima facie 
ilconied to reserve the right of disposal (r) ; and that 
absolute power of disposal is not lost, even if the c<»n- 
signee offers to accept bills or to pay the price (,s). 
Hut this presumption will be rebutted if on the facts it 
appears to have been the intention of the parties that 
the ])roperty in the car«ro should pass to the buyer uii 
shij)ment ; e.g., where the .sellers have only taken the 
l)ills of lading in their own name to preserve their 
lien (t). If a purchaser receives the bill (»f lading 
together with a bill of exchange for acceptance, this is 
tn'idence of intention on the part of the vendor not to 
part with the goods till acceptance of the bill («) ; but 
upon acceptance of the bill or payment of the price, the 
l)roperty will vest in the buyer, the seller's conditional 
. appropriation of the goods having thereby become 
unconditional (a). 

Sales by Auction. 

When goods are sold by auction each lot is prima 
facie deemed to be the subject of a separate contract of 
sale. The sale is complete when the hammer falls, or 

(V) S. a. A., «. 19. 

(r) Ibid., s. 19 (2); and sec Wait v. Baker (1848). 2 Kxch. 1 ; 
Turner v. Trustees of the Liverpool Docks (1851), Exch. 543. 

(,v) See cases in the last note, and also Cotton, L.J., in Mirnbita v. 
Imperial Ottoman Bank (1878). 3 Ex. D.. at j>. 172. 

(/) The Parchim. [1918] A. C. 1.57. 

(u) S. G. A., 8. 19 (3) ; Shrpherd v. Harrison (1871), L. R. 6 H. L. 

1 1 

I* ,' 


I I 


The Salk of Goopp. 

its ..tlunwi.s.. ru.4.„nH,v% uiul ult.T that time tlio bi<l 
••my not be .vtructnl. Tho soll.r or his uuent may bid 
but ..nly ,t uu ..xp,vs.s ....titi.atinn to that eilect is 
,i;>vmi ; a contrav.ntiou of this ruh, mukos the sah> 
'"^"<l"ln.t. Tho seller may notifv that he has placed 
ii reserve price on the goods (y). 

<.'/• «. (J. A., s. .-.h. As to MUCtionc. IN, ^,.l. «/,/e, ,,. IC8. 




( 29.1 ) 


A NK(iOTlABLE instniiiiont has been defined by his 
Jlomiur Judj^e Willis, K.C, as "one the property in 
which is acquired by any one who takes it bona fide, 
and for vahie, notwithstanding any defect of title in 
the pers(»n from whom he took it ; from which it follows 
that an instrument cannot be neji;otiable unless it is 
such and in such a state that the true owner could 
transfer the contract or en^aj^ement contained there- 
in by simple delivery of the instrument " (a). This 
definition involves the foUowint; characteiistics of a 
negotiable instrument, viz. : (i) Property in it passes 
from hand to hand by mere delivery ; (ii) the holder 
in due course is not prejudiced by defects of title of his 
transferor or of previous holders ; (iii) he can sue in 
liis own name ; (iv) he is not affected by certain defences 
which might be available against previous holders, 
e.g., fraud to which he is no party (6). This may be 
illustrated by examples : A. owes B. faCK) ; he gives a 
written recognition of the debt — say the shortened form 
of acknowledgment known as an J. 0. U. The debt 
evidenced by this cannot be handed on to C. so as to 
enable C. to sue on it, unless it be assigned in writing 
and unless A. receives a written notice of the transfer ; 
even then any defence good against B., e.g., no con- 
sideration, will be good against C. But if A. gives B. 

{a) Willis on Nfgotiabli' Instruments (Ist ed.), p. 0. 
(/() Seo per Bowen, L.J., in Simwon^ v. London Joint Stock Bank, 
1 1 Sit 1 1 I Ch.. at p. 204. 




'! I 

( ? 

J : 
! , 

a •■■ 

■ i .; 


1 t 


i P 

f ^ 

'u' ^ 

■ ■ ■ 

4 r 


Xkcjotfablk Instrtments. 

" ""II "f «x,l,.n,.. payable t.. bearer for £5()0. then 
w UMi (. ,ets th. bill f.....n IJ. 1.0 can sue A. without 
j^'iVin;,' spmal notice of the aKsin,unent. and if h. is a 
holder .n due course, he is not liable to be defeated 
by any defence personal to B., e.g., f.aud bv B in 
obtainm- the bill from A. 

The character of negotiability does not attach itself 
o every mstmnient. but only to those which have 
o^^amed .t e.ther by mercantile custon> or statute. 
A\hether or not a document is negotiable is in n.anv 
rases a ,uest,on of fact to be proved by evidence -in 
.some cases mstruments are. as a matter of law, re^o.- 
n.sed as negotiable. Bills of exchange, promisso^v 
uc^es (mc ud.r^ banlc notes), cheques, Exchequer bills. 
East India bonds (c), circular notes (rf). dividend 
warrants share warrants (e), debenture pajtle to 
bear. (/) and certain scrip and bonds, are Sble. 
On the other hand, post office ..rders (^), share 
c^erfficates and transfers (A), and the bulk of scrip 
and bonds, are not negotiable ; an I. 0. U is not 
negofable. nor u.sually is an ordinary letter of credit 
Documents of t.tle to goods have some of the character 
istics of negotiability (<). «ii«^ier 

The list of negotiable instruments may increase, as 
the law recognises mstruments as negotiable when thev 
are transferable by delivery and are regarded by custom 

{c) East India Company Bonds Act. J8II. s 4 
(v/hUtt-^S,^""^^ ''''• '■ ''-^- ('868,. L. R. , C. P. I ; Chalme. 

(f ) See post, p. .'JOJ. 

n\ f^i"^. '^'-' Society V. Union Bank (1886) J7 O K n -nr 
(A) Chalmers on Bills of Fxrhan<TA /«7i . ^ ' '^^■ 

North hr^t^sh -4«.<rai.^.ra/co (ISOsf 3-'l V'^' *'i. •' '" = '^'"«« ^• 
(0 See ../., pp. 2S4, 285 and p5. p' .m,''" ^^'^■' ** ^- 2'«- 



.1- iiej^titi.'iM''. A «ontrai v \t\Mt'mi wmiKl h« " founded 
..II tilt' ' iMW tliut tin' iiiw iiiercliu'it ... in fixed uiul 
t.n!i»ty}KMl, mid iiu iipiibl*' '•! hciii.; e.vpaiuU'd and 
iiilari,'<'d s.( as Ik mt'ei lli«! wants uimI ii'iiiiirenu-nts of 
tiadt! ill tli»' vaiviii'j; liicuiiistaiict's uf <oiiiiiu'i(e " (A). 
and tlioiii^li th»^ !;i«fattir or less tinif diiriiiy wluoli a 
I iistoiii lias e.\ist»Ml mav h^', material in dt'toiininini^ how 
lar it has ncncialiy prevaih'ti, if a u.san<! is once shown 
i;» he universal, tdfect will ■• i;iven to it, thouLih it mav 
lint have formed part of the law mercluvnt as |)reviousl\' 
recognised and a(h)|)ted by the courus (/). The tlecision 
of Kknneuy, J., 'ii bechimnahnd EuplonUioti Co. v. 
Loudon Trading E nk {m), ahows that tlie of 
negotiable instruments may be enlarged by the growth 
of mercantile custom. It wa.s hehl in that case, upon 
proof by evidence adduced in court of recent usage in the 
•iiercantile world, that debentures payable to bearer 
issued by an English company in England were negoti- 
able instruments. 

Seyotiahility of Bills of Exchange, Promissory Notes. 
Bank Notes, Excliequer Bills, and Cheques. — In (joodwin 
V. Robarls (n), Cockburn. CJ., shows the. origui of 
the negotiable character of these instruments. He 
says : '' Bills of e.vchange are known to be of com- 
paratively modern origin, having been first brought into 
use, so far as is at present known, by the Florentines 
in the twelfth, and by the Venetians about the 

(A) Goodwin v. Robarls (1875), L. R. 10 Ex., at p. 34ti ; 1 App. 
Cos. 476 ; Simmons v. London Joint Stock Bank, [18U2] A. C. 201. 

(/) Goodwin V. BobarU (1875), L. R. 10 Ex., at p. 356. 

(m) [18<J8J 2 Q. B. 058: 3 V->m. V-vls. 2>*5 : Edehtein v. ,SVA;/ir t 
Co., [I902J 2 K. B. 144 ; 7 Com. Ca--. 172. See further, post, p. :!u.,. 

(«) (IS76), L. R. 10 Ex. 337, 340. 


!l * 


l' '1 

f i IS 



i 'I 

■1 I 



tliiitn-Mil. c.witurv. Ti.r us.' ut il,..Mi miiduullv tuund 
its way int.. Kninc.'. uiuL still lutri. und but slowly, int.. 
Kti'Jim.j. . . . Acconlitiu t.. Pi.>f<\sM.)r St«)i\ . . . . ' tlic 
itifn.(lu(ti(.ii iiii.l iis.H.f hills ..ICxrhiini;.' in Kii-liiiul 
s.'oins t.. Iiav.' iHM^n lnuii.l,-.l .,n tlu' iimt.- pia.ti(« of 
niorc^hiints. un.l -rmlually t.. Iiavo af'.|uin'.| the Unro ..f a 
ciwtoin.- With tho dcv.^h.pni.'nt of Kn.^liMh commerce 
the use of th(\se most convenient instruments of com- 
mercial trallic would of c..ursc iinivasc. y.-t. according 
to Mr. ( !hitty, tlu! .-arliost cas.j ..u the suhjcct to he f(.und 
ill the Enj,'lish hooks is that of Martin v. Boiirnr (o), in 
the first ..f .lames 1. Up f,. this time the piacticJ of 
Muvkin-; these l>ill« ne-otiahh; hv iiid..isciMcnt had been 
unknown, ami the ..arli.-r bills arc found to be made 
payable to a man and his assi-ns, t,houj;h in some 
instances to b.'aier. But about this period, i.,-.. at the 
ch)se of the sixteenth or the commencement of the scv.'n- 
teenth century, the practice of nuiking bills payable to 
order, and transferrin- them by imlorscnient. to,.k its 
rise. Hartmann, in a very learned work on bills of 
exchan-e, recently published in Germany, states that the 
first-km)wn mention of the indorsement ..f these instru- 
ments occurs in the Neapolitan Pra^r,natica of 1G07. 
•Savary . . . had assi-ncd to it a later date, namely 
1620. From its obvious convenience, this practice 
speedily came into -eneral use, and, as part of the -cneral 
custom .,f merchants, received the sanction of our courts 
At first, the use of bills of exchan-e seems to have been 
conhned to foreion bills between English an.l foreign 
merchants. Tt was afterwards extended to .lomestic biil.s 
between traders and finally to bills of all persons whether 
traders or not. (8ee Chitty on Bills (Hth od.). p U.] 

io) (liiOS), ("ro. ,)au. (i. 



■' In th(Mii('iuitimo. |)if>tiii.sH«»rv notes had nlHoconio into 

iM'. (lilTtM-inu h«M«'in from hills of »'xrlianir<'. tluit thcv 

wrrt' not drawn upon a third party, l)ut rontainod a 

iiiiplc promise, to pay hy the maker restini.' therefore, 

ii|ion tho security of the maker aloni". Thev were at first 

niii(h' payuhlo to ])earer. hut when the practice of nuikinj: 

I'llls of exehan^e payahle to order, and tuakinu them 

tumsferable by indorsement, had once beconu; estah- 

li->lied. the practice of making; pnmiissory notes payahle 

'n Older, and of transferrinii them hy indorsement, as had 

Im'cu done with bills of excluinue. speedily prevailed. 

ami for some tinu» the courts of law acted upon the 

iisaue, with reference to promiH,sory notes, as well as 

witli reference to bills of excliani;e. Tn 1680. in the 

raso of Sht'lden v. Hentley (p). an action was brought 

I'll a note under seal, by which the defendant promised 

to pay to bearer £100, and it was objected that the 

note was void, because not made payable to a specific 

|H'ison. But it was said by the court, ' Tradilio fncit 

vhirlam loqiii. and by the delivery he (the maker) 

•'.vpounds the pei'sou before meant : as when a merchant 

promises to pay to the hearer of the note, any one that 

liiintis the note shall be paid.' Jones, J., said that 

■ It was the custom of merchants that made that 

uodd ' (7) ... In Williunis v. Williams (r). where 

tlie. plaintifT brought his acti<m as indorsee as ajrainst 

the [)ayee and itidorser of a promissory note. declarin<i 

on tlie custom of merchants, it was objected on 

t'iror. that the note havinii been made in London, the 

• iistnm. if any, should have laid as the custom of 

U>) (1081), 2 Show, KiO, 

(«7) See Brmninch v. Lh>yd (l«lt7), 2 Lutvv. 1582. 

(/■) (Hi'.Kl), Carth. 2(>9. 


NKoorrABLE In.stritmk\ts. 



L...i,l„n. It wii.s answered ' this custom »,f 
inercliaiits was part ol the conunoi. law. and the court 
would fake n..ti.e of it .,, offido, and it was 
needless to set forth the custom specially in the leclara- 
Mon. hut ,t was sullicient to say that such a person 
.secuiuium i,s,„„ H iionsiwUalinnn mrrcnformn. drew tl,.' 
I>'ll' and the plaintifr had judj-nuint. 

•• Thus Un the practice of inerchauts. traders, aiul 
"•thers. of treating pn»niissory notes, whether pavahle 
to order or hearer, on the same footiu- as hills of 
(ixchan-e. had receive.l the san.tion of the courts, hut 
Hoi/r having hecop.e Chief Justice, a .s(uuewhat un- 
.se..nily conflict arose hetween him ami the merchants 
as to the neuotiahility of promi.ssorv m.tes, whether 
payable to order or to hearer, the Chief Justice takin- 
what ,uu8t now be adu.itted to have been a narrow" 
numled view of the matter, setting his face stron-dv 
a-auist the neir„tiability of these instruments, contrary, 
as we are told by authority, to the opinion of West- 
"""ster Hall, and in a .series of successive cases per- 
•sistmo „, hoiji,,^. ^jj^^^ ,^^^^ ^^^ ^^ nejrotiable bv 
indorsen.ent or delivery. The inconvenience to trade 
ansui. therefron. le<l to tiie passinj,. of the statute <,f 
.1 & 4 Anne. c. 9. whereby promissory notes were made of bein- assigned bv indorsement or made 
payable to bearer, and such assi<;nment was thus 
rendere,! valid beyond dispute or diflicultv. It is 
obvious from the preamble to the statute, which merelv 
recites that ' it had been held that such notes were no"t 
within the custom of merchants.' that these decisicms 
were not acceptable to the profession or the countrv 
Nor can there be much doubt that, by the usajfe preva- 
l<M.t amonust merchants, these notes had been treated 



.)> securities yntiablo by the customary metliod 
"I assijfiunent much as bills of exchange properly 
>n called. The statute of Anm^ may indeed, practically 
- 1 leaking, be looked upon as a declaratory statute, 
I niitirming the decisions prior to the time of Lord 

" We now arrive at an epoch when a new form of 
-tuiirity for money, viz., goldsmiths' or bankers' notes, 
liii'.ie into general use. Holding them to be part of 
ttio currency of the coimtry. as cash. Lord Mansfield 
and the Court of King's Bench had no difficulty in 
Imlding. in Miller v. Race (s). that the property in 
^ucli a note passes, like that in cash, by delivery, and 
that a party taking it bona fide, and for value, is con- 
^ocjuently entitled to hold it against a former owner 
from whom it has been stolen. 

" In like manner, it was held, in Collins v. Martin (/), 
that where bills indorsed in blank had been deposited 
with a banker, to be received when due, and the latter 
had pledged them with another banker as security for 
a loan, the owner could not bring trover to recover 
them from the holder. 

'■ Both these decisions, of course, proceeded on the 
ground that the property in the bank-note payable to 
hoarer passed by delivery, that in the bill of exchange 
l)v indorsement in blank, provided the acquisition had 
Iteen made bona fide. 

" V similar question arose in Wookey v. Pole (u), in 
icspect of an exchequer bill, notoriously a security of 
modern growth. These securities being made in favour 
of blank or order, contained this clause, ' If the blank 

(.») (1791), 1 Burr. 452. (/) (1707), 1 B. & P. 048. 

(u) (1820), 4 B. & Aid. 1. 

! I 


NwiniiAlil,].; I.NSI'Kl .MK.NT.S. 

' i , 

I :| 

'■' """ '"•"' "!•• "- I'i" -ill Ik. puul to l,0H,.,r.' Su.h 

''-•^; -";.^ '>ll..l „p, „. M., ,,,„^i^ ,,f ^^^^, ^.^^^^^.^ 
. .-.t i.a.l b,...a do,,,.d l>y hi.u with th. .l.fou.lHuts 

" '^ ''"'"^ '"'•• -Ivancc ol .Mon.v. It was hold hy 
"••vy J.ul;^.s ol ,1.. guecn-s IJench, Bavlkv. .1., rf.;: 

: ;;h ' r • t ^'^'^"^"'"' ••"' ^- ^^ -^"t-uhi. 

-..„>. umi j,ul,nH.ut was thn.lo.e ^iv.n lor th.. 
do endautH The judgment of Ho.kov., J., ,oes f.div 
•"to th. .suhjort, pointiu, out the distinction botweon 
"pney and uistrunH-nts which are tho representatives 

't — y. and other for.ns of property. ' Th. .„,,, ' 
iii' .suys, have considered these instruments either 
P-..nses or orders for the payn.ent of monev. or 
ius rnments ent.thn,, tJje hokler to a sun. of money 
as bem, appendages to ,„oney, and followm, the nature 
'" Pnnnpal Alter referring to tho authorities, 

" pHuceds: 'These authorities show that not only 
n oney dseli n.ay pass, and the right to it n.ay aris^, 
^ c .rency a one, but further, that these n.ercantile 
nsh a,„ents. ent.tle the bearer of then, to n.oney, 
^ also pass, and the ..ght to them may arise, in 
•ke n.a..ner, by c.nrency or dehyery. These decisions 

'-ed upon the natu.e of the property (.... .noney) 
^. Im-h such .nstruments giye the right, and whid 

vh 1. H ' '"^' '^'' ''^'''' "*■ '^' instrnn.ents, 

Kh e.tlK.g.v. to their holders, merely as .s.,ch, a 

ii;.ht to receive the n.cmey, or specify then, as the 

persons entitled to receive it.' " 

"Another very .en.arkable instance of ti.e efficacy 

:'l usage .s to bo lo,.ndm much mo..e recent times U 

Jsno.,no.. tiKU, with the ex^^^^^^^^ 

i^^gluml. the .syste.u of banki,.g has recently undergone 



,m o.iitiio c.luuii^c. Inst.Md of the l)aiik«!r i.sriuiu;^ liis 
osvii notes in leturii for the money of the cnstoiMer 
.l.-posited with iiini, he -ives credit in account to the 
depositor, and loaves it to tlic latter to tlraw a\>uu him 
to hearer, or order, by what is now called a chc(iue. 
l'|M.u this state of thinji;s the general course of dealing 
Let ween hankers and their customers has attached 
incid<Mits picviously unknown, and these by the decisions 
of the courts have become lixcd law. Thus while an 
ordinary drawee, althon<;h in possession of funds of 
the drawer, is not bound to accept, unless by his own 
aureement or consent, the banker, if he has funds, is 
bound to pay on presentation of a checjue on demand. 
Kven admission of funds is not sufficient to bind an 
ordinary drawee, while it is sufficient with a banker ; 
and money deposited with a banker is not only money 
lent, but the banker is bound to repay it when called 
tor by the draft of the customer (x). Besides this, a 
lustom has grown up amongst bankers themselves of 
marking cheques as good for the purposes of clearance, 
by which they bec^ome bouml to one another (y). . . . 
It thus appears that all these instruments, which are 
said to have derived their negotiability from the law 
uierchant, had their origin, and that at no very remote 
period, in mercantile usage, and were adopted into the 
law by our courts as being in conformity with the 
usages of trade." 

XcgoluibilUtf oj Bonds Patjahlo to Bearer.— U has 
been decided in several cases that foreign bonds payable 
to bearer, the property in which passes by mere delivery, 

(X) Potl V. C7ef/f/ (1847), 10 M. & W, 321. ^, . , , 

(V) As t" tlic iw-'itiiil)iiiiv of .hciues, see McLian v. Clydesdale 
liuiikiny Co. (iSH4). 9 App. Cai. 1)5. 


Nkcotiahlk Instklmknts. 


will 1.0 .kHM.Hvl n.-,otiabl. by tho Enjilish law. if it is 
the nist.uu „l tlu! ,n„nev nuuket in Kn-Iand (->) f„ 
treat tl,.-,,, as neuctiahle. The ea.liest loa.lin, .as,. i„ 
whicli tins was laid down was Garyier v. Mieville («)_ 
u case (I(,,lin,u witl, Prussian CJovennuont bonds This 
I'as boon approv,.,l and f.,nowed on n.anv subsequent 
onus.ons r.ff.. in Goodwin v. marts (b)', in which it 
was decde,! that scrip to bearer for Russian bonds was 
In- custom n.-otiable. The most authoritative of recent 
eases bearing on this topic is Lo>,<lon Joint Stock Bank v 
'^unmans, in the House of Lords (c). in which certain 
Ar-entnie bonds were treated as negotiable. 

yei,otiahn,t„ of Dindend Warrants.~\ 
warrant has many of the characteristics of a checp.e, 
-ud the Bdls of Exchange Act, 1882. provides that thci 
n'l';s re to the crossing of cheqnes shall applv to 
clivubnu warrants [d). and that nothing in the Act shall 
H«ect the validitv of any usage relating to dividend 
warrants or the md<.r.senient thereof {e). The received 
-mum ,s that dividend warrants are negotiable (/). 

NegntMin, of Debenture..- ^k, eust<.ni of n.erchants 
to treat debentures payable to bearer as negotiable has 
recently been recognised by the court, both in the case 
•'» I^ngbsh ami foreign bo.uts, and. judicial m.tice will 
■low be take,i of tJie fact that such bonds are negotial,le 
A.Torchngu, those debentures to which the custom" 

(d) .Section !)o. 

('■) Srctir.n !|- (3) (d). 

(./ ) Clmlmors „„ BilLs of Kx. |,,.,.g.. ,v,h cl.), ,,,, -.m, ;{7(, 




,i|i|)lieii imiat be ciiiisiiloicil as ue>;«)tiablo in the strict 
riisti 1)1' tlio teiia (fj). 

Qaasi-ScgotiahilUn of Bills of Lading. —Xccovdhv^ 
t,. the special veniict of the jury in Lickbarrow v. 
Miisnn (h), hills of ladiiiii, if drawn to order or assigns, 
ire by the custom of merchants negotiable by delivery 
,md indorsement for vahie, provided that the goods 
ivprestiuted by the bills have been shipped and the 
\u\iig(! has not yet been completed nor delivery made ; 
il (he indorsement is in blank the holder is entitled to 
till in the name, and thus put the bill cm a negotiable 
I Ml .ting. This statement of custoin has been adopted 
liv the court as law. If the bill is not drawn to " order 
nr assigns "' of the holder, it seems the bill is not 
ii.'Udtiahle («)• Nevertheless bills of lading, though 
(liawn to order, are not negotiable as a l)ill of exchange 
is negotiable. They are not negotiable in the strict 
st'use of the term, for the transferee, though bona fide, 
and though he lias given value for the bill, cannot get 
a tiood title from a transferor whose title is defective. 
They are in effect only negotiable so as to defeat, in 
lavour of a bona tide transferee for value, the lien of 
tlie unpaid vendor and iius right to stop in iransitu (k). 

Xi'gotinbilil!/ by EsU>ppel. — An instrument may be 

!</) Btchimnalund Exploration Co. v. London Tradintj lUmk, 
Limited, [18!»81 2 Q. B. t),J8 ; i ('<Jin. Cas. 285 ; Ed(lM<iin v. Schukr 
,1 Co., [1902) 2 K. E. 144 ; 7 Ckmi. ("««. 1"2. 

(h) (1793). I Sni. L. C. (12th id., at \>. 7.')4. 

(i) Henderson v. Comploir U' rJ/iromptr de I'arix (1874), Jj. I!. 5 

I'. ('. 2r.3. 

[k] (litrnii/ V. lifhrind (1854), 3 K. & B.. at pp. «33, ()34. per 
l,cii(l (AMPBELi. : Schu.slir v. McK'Unr (18.">7i, 7 K. & B. 704; and 
sec observations of Selbourne, L.l'-. and Lord Ulaikburn, ia 
Scmll V. Ihirdirk (188.5), 10 Ai,>,.. Ciw*. 74. 



Nkootiaui.i; I nsi hi All; NTS. 

so w<.r,lr,l us to pivrlialc tlins.- wl,., ,,iit it into rii.-uhi- 
lioii |,(,„. (I.'iiyin- its ii.-otiiiliiliiy. ir llnr ownor of 
■siicli ill! iMslmm.'iit clutlios h tliinl iKiity with tin; 
uppuiviit owiieislii|) iiiid liolit to disi).,sc of it, lu- will 

' ''t"l'l""<' f'<'m Hsseitin- his titl(! Huaiust a ihmsoii to 

vvh.mi sii.l, third |mmsoii has tiaiislnr.'d it, and who 
"'«<Mvrd it in -(.od faith and f..r valuo. Tlie n^pro- 
scntati..!. f(.n(ainwl in tho instrnnicnt is in <^fT('ct the 
ropi.-<Mi(ation of tln^ ..wner, and tho oidinarv d..ctiino 
of (!stoj»j)i'l applies (/), 

Bilks oi K\cjian(;k. 

I'll'' law rdatiim to tho most imix.itant of th« 
trujntion.-d instiunionts has h.M'ii arianued in the form 
ol a .ode (wliicJi. however, is mainly declaratory, and 
made l,ut iov.' alterations in the law (m)), in tlie Bills 
of Exe.han.ue Act. 1882. and in it will be found the chief 
hiw on the subject ; but all rules of comniun law and the 
law nuuchant, relatiji- to bills of (^xchanj^e, promissory 
dotes an. I <he(iues, remain in force except in so far as 
th«»\ are inconsistent with tht; Act (/;). 

/ ^nition. •• A bill of e.xchan-^e is an unconditional 
o'' in wiitnm, addressed bv one person to another, 
.•*f^ by the pers(m -ivin^ it. re.piirin;- the person 

' • wnn it is addressed to pay on demand, or at a fixed 

determinable future time, a sum certain in nuuiey to 
..1 to the order of a specified person, or to bearer '' (o). 

V U,^: m^t;"l V ''"'fr <'^^*'- 'S APP- <''^^- ''t I'- 285; Goodwin 
Msi^Wr;* '!';^"'.f;i"^ nx M.L,nn v'. ci,,d,.dal, Banki,,,, ('„ 

(o) Strtidii 3 (1). 

Hills ok Kxciianuk. 


l''iniii this it will \>i'. so«ii tliiit wliiit is nujiiirod is a 
wiittt'ii iiistruiiu'iit to whicli them iini threii parties, 
tliiit tiio iiistniiiHMit must hv, an order to pay inoiicy, 
and tluit it imist be iiiu()iiditi(»iiid (y>). Thus, it iiiiiy 
intt order uny iu;t to ha (h>ne, in addition to thi! 
|iiiyhient of money (tj) ; nor nnist it «»rder payment 
out of a piutieidar fun<l. for this would not he uncon- 
ditional (r) ; but it may specify a fund out of which 
the i)ayer may reimburse himself, or may specify a 
particular account to be debited with tlie amount (r). 
This dehnition includes cheques (<). and in Banns v. 
LotuioH and South Wedern Bank (u), a document in 
tiic form of an ordinary cheque ordering a banker to 
pay a sum of money " prodded the rereipt form at foot 
hrrrttj is duhf sigvcd, stamjyed and dated." was held not 
t(» 1)0 unconditional, and therefore not a cheque within 
the meanin<f of the Act. 

Home usual forms of bills are as follows : 

aUK). London. January Ist, 1889. 

Two months after date pay CD., or order, the 

(si AMP.) 

To Mr. E. F. 

sum of one hundred pounds sterling for 
value received. 

A. B. 

(p) That is, tilt' unler to |Kiy mu.-jt be uncuiiiiitioimi. See tiol/i rli ,{• 
i.'o. V. Marsh, [1915) 1 K. \i. 42. As to coiiilitiuucil ticcrptiincea and 
iiidorsi'iiu'iits, .sec /;'><<, j)p. Ills, ,■{21. 

(7) Section :J (2). 

(r) Section 3 (3). 

(0 /'ov<, p. :{",(>. 

(u) [1»00] 1 y. B. 270; 5 Com. CW 1. 

^ 1: 




Bristol, :>tli MaiTh, 1897. 
(STAMP.) f" dfimuid pay C. \). the siun of fifty pounds 


Tu K. h\ 


fc .steilini,' for value received. 

K. S. 


NewciLstle, Lst Marrli, 1897. 

(sTA.lii)!^-^"**' *^- ^' ^^^^y ^**^>'« *^^ter ,sii;ht. .seventy 
T^g^ pound.s .sterIin"^ 

To A. B. C. 



F. a. 

Newcastle, 3rd Ortober, 1897. 

^d'.iigJuiiies Brown or hearer on 1st November, 
(sTAMi^e 51897, the sum of one hundred pounds for 
■^ * lvalue received. 

To Mr. AuTHLu James. 



Loudon. 1st .luiH". 1897. 
! Jl'eil- days after date pay to my order the 
(sTAMp|t |mm of one hundred and liftv pounds for 
^ ® "'aluo received. 

To Henry Brown. 

John Smiti!. 

The throe parties are styled respectivelv in the cas.', 
of Form 1.. the dra^^er A. B.. the payee ('. D., and the 



ili;i\vt't> (who. if lifl acre|(ts, heroines accpptoi) E. F., but 
tli<' Itill is '^i)nd il it hi' druwit payable to tlii' (luiwvi 
(sf«' K(»riii y. above) or to the drawee (t). It should be 
iulded that the bill mav. at the option »)l the holder, b<' 
treated as a pioniissory note if drawer and drawee are 
the name person (//). The drawee must be named or 
indicated with reasonable certainty, and if the bill is not 
payable to bearer, the same will apply to the payee (s). 
Tlierti may be several joint drawees, but alternative or 
siircessive drawees are not alhtwed (a) ; a drawee or 
ref«!ree, in case of need, may be named who, after dis- 
honour and protest for non-acceptance, may accept or 
pay the bill with the holder's assent (6). The payee 
is the bearer if the bill expresses that it shall be so, or 
if the only or last indorsement is an indorsement in 
blank ; it is payable to order if it is so expressed, or if 
it is expressed to be payable to a particular person, and 
does not contain words prohibiting transfer (c). The 

• late should be insertetl, but if a bill is issued undated, 
the omission is not fatal (d), and the holder may insert 
the true date ; if by b«)na tide mistake he inserts the 
wronji date, the date inserted will be deemed to be the 
true tlate, both as regards himself and every subsequent 
holder in dtie course {e) It may also be stated here 
that a date on the bill is. in the absence of evidence to 

(yj Section 5 (2). >So alsu if the <iruwet> in a liotitioii.s ur nun-capalilc 

(:) Sections U (1) and 7 (l). It is jwrniitted to add the drawer's 
luvini- after the ao(^cptor's (Icath (Carlfr v. Whitt (1884). 2r) Ch. D. 

• UK)). 

(a) Sivtion ♦) (2). 
(/;) .Se<;tj(.ns I.). 07. 

(r) Soctiiin S CI). (4). Tht> otfect of this is dealt with hereafter, 
\>. MM. 

((/) Seidion 3 (4) (a). 

{^) S-otion 12. " Udlder ill due luiirsie ' iH deliiied jmst, p. ',','2'2. 

Jl if s 




■1 1 





' 1 



N'K«;«)rr.\ni.K J \s rat-MKNTs. 

the vuuuaiv. .I.mmh.-.I f., I.o ,|„. f,,,,,. ,lat„. un,l that u„ 

n.stnnm.nt t.Mvhi.h ti... Art apphVs M.HV Im. ant.Mhitcd 
post-diit^Hl, or (hitcd MM ii Sim<U\ if). 

Th. .sum ,,«yahh. by a bill ,« - ,,,tain - (,/). although 
'■•• I'liml to 1m, (i) with int,M-..Ht. or (ii) bv stutnl 
Mi.stul„nM.fs. or (iii) by stato,! in.stal„Hmt.s with a ,,r..- 
v.s.on that, on .l.tault i,, paynuMit of auv instalment 
the wlioh. shall b,.<onu. ,luo. or (iv) acor.jin.r to an 
.nai<-ate,| rate of ex.-hnnue to be asc-ertahied as 
< -nvte.i bv the bill (A). If the words an.l fi-nues 
•tiller, the an.onnt payable is that expressed in 
words (h). ' 

A signature on blank stan,p..d pap.-r ,na\ be .lelivered 
>,v the Signer for the purpose of bein;; converfe.l info a 
••III aud such <lel.very operates as a prima fa. ie autlmrity 
t'. tdl ,t up OH a eompiotc bill f„r any amount the stamp 
vvdl cover. Such an instrument after completion cannot 
be enf.)rced a-amst any person who became a partv to 
It before cunpletion, unless it was filled up within a 
reaso.uible tin.e, and strictly in accor.iance witJi the 
authority g.ven ; except where after completi.m it is 
uu-^otiated to a holder in due course (4). 

Hut the c.n.mon law doctrine of estoppel niav apply 
to such instruments apart from anv questicm of ^" ne-d- 
tiation. ' Thus, in Lloyds' Bunk, Lhmkd v. Vookelk) 
wheiv the defendant signed his name on a blank 
stamped piece of paper and hamied it to u ctistomer of 
the plamt.tls with authority to fill it up as a promissory 

(/) .Sect ii 111 |;j. 

((/) Sou dchnit..,,, of a bill of exchanu,., anU, p. ;JOt> 

(») Section 20. 

(/.) 111KJ71 I K. B. 7U4. The decision assumed that tlw,.. ^ 

Ut, ISS2, s. .0 (J;, ij. U.rJwan v. iy/,.,Ur. [1!HI2] | K. jj ;jiil 

Rills of Exchance. 


iiMf»» for a «'«rtain sum payahlo to the plaintiffs and 
ilflivor it to th<' plaintiffs as security for an advanct' to 
Im> Miado by IIkmii. and tho custotnoi fraudulently filled 

amount from tho 

III a lart;<tr amount and obtained that 
plaintiffs, it was held that the defendant was estopped 
I mill denyinu the validity of the note as between himself 
;nul the plaintiffs. On the other hahd, where the 
ilefendant sii;iied blank forms of promissory notes and 
liund»!il them to an aj^ent f«tr safe custody, it was held 
that tho defendant w»i8 not liable to a bona li<lo indorsee 
tor value to whom the a^ent had fraudulently ne;,'otiated 
them: for havinii handed the notes to liis a;ient as 
iiiistodiau only, he was not estopped from deuyinn their 
validity (/). 

Tho words '' value rweived "' are usually inserted, but 
there is no necessity for this, as value is presumed until 
foiitiudicted (in). The place where the bill is drawn or 
payal'le need not be stated (n). 

The bill may be written on paper, or on parchment, 
or on anythin<i except on a metallic substance, and it 
may b»! written in pencil, oi- in ink, or may be partially 
or wholly printed. Kvery bill of exchanj^o and pr<»- 
missory note must be utamped (o). The stamp, which 
must be a bill or note stamp, cannot be added after the 
(late of tlie instrument. 

Parties. — The Act declares that capacity to incur 
lial)ility on a bill is co-extensive with capacity to 

(/) Smith V. Prosser, [1907] 2 K. B. 7:»5. 

(//') Section 3 (4) (b). 

(H) Section 4. 

I')) IiHtnunouts whii'h do not t-oinc within the dcHnition of a bill of 
<S( haiige given atiove may, nt'vcrtheli's.s, be sucli for the purpose of 
thf Stump Act. 



m ill 2.8 



125 iu 

I 2.5 



^ ^PPUEDjM^jGEjr 

^^ ' * '*^'~' fast Mcrr ^.f^ee' ~~~ 

r^S "."Tf-"";; '-<■•;■:■". ' ^^609 USA 

^^ I'.' 28S - 59b9 - Fa, 




1 1 ;•■ 


:: 1:1 : 




contraot (/>). as to wliuli see atdi'. j). :'• I . Bill the f«tllu\v- 
iiig rules are peculiar to tlie present subject : 

No person wliu lias iutt signed us suili «'an be liable 
as drawer, iiulor.ser, oi' acceptor, except that a trade 
si^^natiire, oi si^natiii'e under an assumed name, is tlu- 
equivalent ol' si;.;nature in the sii^iier's own name (q). 
Tlie, signature of the uaiue ot a lirm is equivalent to the 
siunature by a person so siiining ol" the names ot all 
persons liable as partners ot that firm (q). 

\ limited company incorporated for the ^ iirposes of 
trade or otherwise havini!; caj)acity. may be a party to 
a bill, and will be bound if the bill is made, accepted, 
or iiulorsed in the name of, or by or on behalf or on 
account of the company by any person actiiij^ under 
its authority (r) ; but in order to bind the company 
the person signing must be some one who is in jacl 
acting under its authority (s). The name ol the com- 
pany must appear in legible letters, and the word 
" limited "" after it ; otherwise the officer who causes the 
signature to be attached is liable to a penalty as well as 
being personally liable on the bill {t). 

An agent may have authority to sign for his oriucipal, 
and if he uses words tending to show that he signs 
qm agent merely he incurs no personal liability (m). 
But it does not follow because a man signs his name 
with wt)rds describing himself as agent, manager, etc., 
that he will be relieved from liability ; the point to be 

(u) Section 22 (1). An infant tannot bind himself l)v aicepting a 
hill (iifc SoUijkoJf, 118911 1 y. B. 413). 

(q) Sertion 23. 

(/•) Companies (Consolidation) Aet, 1!>08. s. 77. 

r<) Fremitr liuiiuslriul Bank, Liin.itnl v. Carllim Maniifacturhui Co., 
LimUid, L1909] 1 K. B. 100. 

1^1) Companie.s (Consolidation) Act. U)08, s. (»;}. 

(,() Seetion 2f. (I). 

Bills of Exchange. 


loterminod is wliethor the wcrcls used suffice to -ive 
a,.tice that the sii^nature was affixed in tlie capacity ot 
iTent or wliethei thev are words of description. Thus, 
X accepts bills as " X., executor of Y." ; he is liable (x). 
But if he accepts " For the A. Co. Ltd.. X. manager, ' 
he is not liable {y). If the signature is by procuration, 
it operates as notice that the agent has but hunted 
authority to sign, and the principal is only bound by the 
si-nature if the agent was acting within the actual limits 
..Fhis authority {z) ; but a per fro signature to a bill 
made in fraud of the principal and in excess of the 
authority given is not a forgery (a). 

As to bills signed by one partner or more on behalf 
of the firm, see under " Partnership "' (6). 

Where a bill is drawn or indorsed by an infant, or 
by a corpi.ration having no capacity to incur liability on 
the bill, the holder may enforce it against 
anv other parties having power to contract (c) ; i.e., the 
title to the liill is passed by the infant's signature, but 
i^ passed san.s recnurs to him. 

Aeceptawe,.—T\x^ liability of the drawee does not 
arise until he has accepted the bill, and this is done by 
writin.^ his name across the face of it ; sometimes the 
word '-accepted " is added, though this is not necessary. 
The Act defines acceptance as " the signification by the 
.Irawee of his assent to the order of the drawer " (d) ; and 

Cc) Liverpool Bat,k v. Walker (m9) 4 De G & J. 24 

iy) Alexander v. Siutr (1809). L. U. 4 Ex. 102. 

(s) Section 25 ; biit see po.<f. p. IW?. „. , . , r „t riQiil 1 

(a) Morison v. London Covnti, and Westminster Bank, [1913] 3 

K. B. 35f.. 

(ft^ Ante, p. 186. 
(c) Section 22 (2). 
(rf) Section 17 (1). 









t !! 











NEfioTiABLR Instruments. 

it enacts tliat (i) tlie si'.uatun^ of t}io diawee iiiust 
1)0 written on tlio bill ; (ii) the urceptanoe nuist iK.t 
stipulate for performance by any other means than 
the payment of money (e). The bill may be accepted 
thouuJi it has not yet been signed by the drawer or is 
otherwise incomplete, or though already dishonoured, 
or thous^h overdue (/ ) ; bnt no signature will be bin lins^ 
and irrevocable ai^ainst any person until after uncon- 
ditional delivery of the instrument, in order to j^ive 
effect thereto ; but an acceptance becomes irrevocable 
if the diawee ;;ives notice to or according to the 
directions of the person entitled to the bill that he has 
accepted it (g). 

(July tiie jx'rson to whom the bill is addressed can 
accept it. unless lie acce)»ts supra protest for the hononr 
of a party liable on the bill (h). 

Deliveiy between immediate ])arties and any remote 
party who is not a holder in due course mav be shown 
to liave been contlitional only ; but a valid deliverv of 
the bill l)y all parties prior to liim is conclusively pre- 
sumed in favour of a holder in due course (?). A valid 
delivery is also pKvsumed to have taken place where the 
bill is no longer in the possession of a party who has 
signed it as drawer, acceptor, or indorser, but this 
presumpti(m may be rebutted (/:). 

It is always advisal)le to present the bill for accept- 
ance, for if it be refused, the parties, othei' than the 
drawee, become immediutely liable, thouuh the bill has 
not yet matuied (/) ; and it is sometimes necessarv. 

{c) Section 17 (2). (/) 8t'.ti.Mi IS. 

(V) Spotion 21 (I). 

(/;) .t,i,k:i,it, V. Uli'hon (ISMIl. •.»(':uili> *-*" " P'tst 1) "I" 

(»■) Section 21 (2) ' .,.,,..,,. 

(/, ( Siviion 21 (3). ,/; .Section 4:{ (2). 

Bills of Exchawe. 


, ,, ^v]lo.•o iv l>ill is payable after si-lit, pvescntnient is 
uiressavv to fix tlu> maturity of the instnuuent ; and 
when it' is pavahle at a place other than the place of 
,vsi(ience or business of tlie drawee, or when it is 
,.xpr.^sslv stipulated that presentment shall be made, 
it must" be presented for acceptance before it can be 
presented for pavment («()• 

The Holder must present a bill payable after si-lit tor 
a.reptance, or negotiate it. within a reasonable time ; 
what is a reasonable time dependin<4 upon usa^e and 
tlie facts of the particular case (n). Thus, on Friday a 
person received at Windsor a bill on L.mdon. and the 
hill bein-i payable after si^ht it had to be pres.mted for 
acceptance ; ' the holder presented it on Tuesday, and 
the jury, reyardin- the fact that there was no post on 
Saturday, thou^ht the time reasonable (o). The penalty 
for non-presentment is discharge of the drawer and all 

i)rior indorsers (p). 

The foUowin,!^ rules as to presentu.ent for acceptance 

are aiven in s. 41 of the Act : i , u 

"(a) The presentment must be made by or on behalt 
of the holder to the drawee ov to some person 
autliorised to accept or refuse acceptance on 
his behalf at a reasonable hour on a business 
day and before the bill is overdue : 
" (b) Where a bill is addressed to two or more 
drawees, who are not partners, presentment 
nmst be made to them all. unless (me has 

(,„) Section :V..: unless th,> hoUlor Im. not liu.c to present for 
a.acptanco before presentinc; for payment (s. .{.» (4)). 

In) Section 10 (3). _ , .. .-. 

" Frv V. Hill (IHI7K 7 Taunt. :W- : an.l s<'e .S/-»/< v. 
1 Moo. & .M. 13:i : 3(;.&l'.80. 

(p) Section 40 (2). 

Holii ii". 


\R0OTrABr.K Tnstritmrnts. 

) i 

.autlioiity to aocopt for all. tlion jiresftntniont 
niav be made to him (mis' ; 
" (c) Where the drawee is dead, presentment may 

be made to his pei-sonal representative : 
" (d) Where the drawee is bankrupt, presentment 

may be made to hini or to his trustee : 
" (e) Where authorised by agreement or usaye, 
.1 presentment throuuh the post oflice is 
Presentment, thounh otherwise necessary, is excused 
in the followiny, and the holder may treat the 
bill as though acceptance had been refused, i.e., may (in 
fa('t. must, if he desires to hold his remedies a^tainst 
the drawer and the indorsers) {q) treat the bill as 
di.shonoured for non-acceptance : 

" (a) WHiere the drawee is dead or bankrupt, or is 
a fictitious person or a pers(m not having 
capacity to contract by bill : 
" (b) Where, after the exercise of reasonable diligence, 

such presentment cannot be effected : 
" (o) Where, although the presentment has been 
irregular^ acceptance has been refused on 
some other groimd " (r). 
" The fact that the holder has reason to believe that 
the bill, on presentment, wall be dishonoured does not 
excuse presentment '" (s). 

Presentment for Acceptance of Documentary Bills. — 
Bills are often dra\vn against goods and negotiated with 
the bill of lading or other document of title attached until 
accepted by the drawee, thus furnishing the holder with 

(q) See s. « (1) (b). (r) Section 41 (2). 

(s) Section 4) (3). 

Bills ok Kxciian(ik., 


,, security in acceptance slu.nKl h. refused. On 
,.......,tance tlie docn.uent of title is retained by lie 

....eptor and the aoepted bill is returned t<, the holder 

la such . , a holder in duo course who presen s a bill 
..t exchange for acceptance does not Nvarrant that the 
l„ll ..f exchauj^e or the accouipanyin<; document is 
...nuiiie. Thus, if a bill of exchan^;e is accepted upon the of the j^enuinene,ss of an attached bill of ladin, and 
,1,. latter subse-piently turns out to be forged, tlie 
acceptor, althou^^h compelled to pay the bill of exchange, 
has no remedy against a holder in due course who 
presented it f..r acceptance ; his rights are only against 
the fraudulent drawer (/). 

Acce^Uo^ce for Honour supra ProlesL-ii the drawee 
aoes not accept upon presentment, it is the duty of the 
holder at once to treat the bill as •ii^l^'^^^^^J (")' ";;^. 
he mav, if he thinks fit, note and protest (rr), the biU for 
non-acceptance. In that case, if the bill is not over- 
due, and if the holder consents, any person n(,t bemg a 
party already liable on the bill may accept it for the 
whole or part of the sum drawn {y), and such person is 
styled an acceptor for horwur sujrra protest. He must 
.i'n the bill, and indicate thereon that his acceptance is 
fcH- hom.ur, and it is presumed to be an acceptance for 
the honour of the drawer, unless it state some other 
party for whose honour it has been made. Usual!) 
the 'acceptance for honour is attested by a notarial 

(,) Guura^Uy Trust Co. of New York v. Uannay <f Co., [1018] 2 
K. B. «23. 

\^ £'i w 333. 334 : and nee the Act. ss. 51, 93. 



••i t 

ill ii! 

% it:: 

! 'i U 







1 i 


" act i»f liouoiii' '■ recoidiuj; the process, but tliis is not 
necessary (2). 

The <()urst! ot conduct which shoukl be pui'sueil by a 
holder of a bill dishonoured by non-acceptance, and 
\v]io has an ollVr ol an acceptance lor honour, is thus 
described : "' ile -should first cause the bill to be pro- 
tested, and then to be accept cil supra protest, in the 
manner above tlescribtul. At niaturit}- he should a<;ain 
present it to the drawee fnr payment, who may, in the 
ineantinui, have been put in funds by the drawer for 
that ])U!i)ose. If payment by tlm drawee be refused, 
the bill shoidd be protested a second time for non- 
pavment, and tlien presented for i)ayment to the 
acceptor for honour " (a). 

Qualified Acceptances. — The following are qualified 
acceptances : (i) contlitional, i.e., which makes the bill 
payable on a condition therein stated ; (ii) partial, i.e.. 
which limits the agreement to })ay to a named portion 
of the anumnt for which the bill is drawn ; (iii) quali- 
fied as to time ; (iv) acceptance by some, but not all, 
of the drawees ; (v) local qualification. e.(j.. '' accepted 
payable at the London and County Bank, Lombard 
Street, only.'' But an acceptance to pay at a particular 
place is umjualified, and payment may be demanded 
anywhere, it states that the payment is to be 
made at a particular [tlace only, and not elsewlicre (b). 
An acceptance will not be treated as (jualified nnless 
the words used clearly make it so (r). The holder is 

(;) (.'liiiliU'.is" Bills of Kxi]!ai)j;t' (Stli kI.J, |>. 2()0. 

in) llyles 1)11 JJills ( Itith id.), jip. 27."», 2"<i ; iiid sec s. tiT ; H'illktm'! 

\b) yLttiim 19; am! :;(i; Innu u[ liiii N'n. III., miU , \k oUS. 
(1:) Ihiioic V. .Uti/if, jKi- linwjiN, L.J., '2o y. J>. L)., at [>. 340; 
allinuc.l, liS'JlJ A, C. o2U. 

Bills ok Kxchanmik. 


not Ix.iiii.l to tiiko ii qualiacd mcei-taure, uiid it tli.; 
aiaw.'c ictuses any other, the hill may he treated as 
aishououred by nou-acceptam-t' (</) ; and except in the 
, ase ul a partial acteptaute ot which due uuticc has been 
.^iven, it the holder without the express or implied 
authJritv (»r subsequent asseut of tlie drawer or aay 
mdorser^ takes a iiualitied acceptance, he will release those 
who have not authorised it or assented to it (e). 

yegolialloH.-X bill may contain words prohibiting 
transfer or indicating an intention that it should not be 
transferable, and if it contains such words, although 
valid between the parties, it is not negotiable; but 
ihe intention to prohibit negotiation must be clearly 
expressed. It seems doubtful whether the negotiability 
of a bill payable to order can be restricted by such 
words (f). The characteristics of negotiability have 
already been pointed out, and it now reiuains only to 
show in what manner the instrument is put in circula- 
ti(.n. The Act savs that a bill is negotiated when it 
is so transferred as to luake the transferee the holder of 
the bill((7). In the of bills payable to bearer, 
this is done by mere delivery (/*). In the case of those 
payable to ordor, indorsement, in addition to delivery, 
is re.piisite (i) ; and transfer, though lor value, without 
indorsement gives only such rights as the transferor 
had in the bill, with a right to reciuirc indorsement (A). 

id\ Section 44 (1 ). (0 Sfotioa 44 (2), (3). 

( /) £ti"u 8 (I); Xulional Bank v. ^ULr, [18U_i] 1 Q- i^- 435 ; an 
lo cheques crossyd " not ut-gotiabk'," sec poft, p. 3o2. 
(./) Sfctiou 31 (1). 

\'i) S'<m 31 (3).' Tlie bill is not mUly a iieRotiabIc iimtrumfiit 
until it ha.s been indorsed in such manner tlial it becomes payable to 

(k) Section 31 (4). 

.'{2< » 

N Ki ;< >ll A lll.K I Nsrill ' M KNTS. 

; ! 



'I'liiis, if A. Iiiis H l)ill piiyublc t«» InninM-, iiiid lie jiivcs it 
ill «lii(> cniirsc t(. IV. M. Ik.Ms it with nil A.'s ri;;lit.s of 
suit Mil if. iiiid witlmiit A.",s deft'cts of titl«! ; if it, \h\ 
piivalth' to uKJor. \i. iniiv nvpiini A. t<> irulorsc it. but 
iiiitii tlii.s is (Iniic lie hdlds it siihjcct to Jiiiy drftnicr 
whicli could Ih! liiisrd ii;j!fi.inst .\. : such iiHloi.soiiiont 
opemtps a,s a iK\i:otijition. hut will not cuic juiv (h>foct 
ol the transfcioi's title of which tho in(h)rse«« had noti(« 
lu'fom thf iridois«Min'.nt was obtained (/). The iudorsc- 
Mierit must be written on the, bill, nnd signed by tho 
indorser (in ;ieneral. the siL;natuie alone, is placed on 
the back, or, if tluMe be not sufficient room on (he bill, 
then on an annexed paper styled an '* allonge." and 
this is suificient) (m) ; if his name is misspelt, he may 
si-in according to the misspellinLT. and then add his 
correct name (n). A partial imlor.-;oment is nseless as 
a negotiation (o) ; so would be the signature of one of 
several paities (not being partners) to whose joint order 
tlio bill is payable, unless such party is authorised by 
the others to act in this matter for them (/>). 

Indorsements are of two kinds: (1) in blank, 
(2) special. An in(h)rsement is in blank when the 
signature of the indorser is written without any direc- 
tion as to whom or to whose order the bill is to be pay- 
able, the bill is then i)ayable to bearer ; a special 
indorsement specifies the payee (7). Thus, if A. indorse 
a bill '• Pay to B. & Co. or order," this operates as a 
special indorsement, and if B. & Co. desire to negotiate 
the bil! they must themselves indorse it ; this they may 
do either in blank or specially. It is always at the 

(/) Whi-slUr V. for-skr (1803), 14 C. B. (x.s.), at pp. 257, 258. 
{m} Sectk.ii -.i-l {I}. 

(n] Section 32 (4). (p) Section 32 (3). 

(o) Section 32 (2). (q) Section 34. 

r.ii.i.s <»i K\( ii.\N<.i. 

ipllull III il lliilili 


1' ti) rnllM'l 

t it lihillk liitii il sl.nciiil 

111' llni'S SI I 

li\ w rhiii'.' .1 

hiivi' till' iiiiiorsfr s 

Mliltlllf il lliicrliiill li» piiv t 

lir i.ill to. Ill In ill"' ""'•■"' 



Of II 

f SI. nil" ntllfl- pfisull {r). 

Iinlniscnii'iits art- sn 

mi'tiiiu's coiulit ii>ii;il. ' .'/• 



1 l»v Jill imcnt or otliiT pi'isoii 

III such il Wiiy iis 


|i"JiltlVi' JXTSOllll 

nils sfiiix ncinii's) 


1 liiil.ilitv (>.r.. l.i<ii«l<ls to liis l.iim.' tlir 

i,ts (oinlitioii.ll upon lilt" 

if jiu I'vciil (•»■). A 


1 ,,f i. sliip or tlii' liiipiMMim 

iiliriiliir fomi ot I oi\( 

litioiu.l iudois.-incut is thr rrslrir- 

lin; iiKlorsciiK t 

,1, \ i.'stiictivo iiidorscmi-iil iniiy 


cif autlioritv to i 

Iral with till- I'ill ii^ < 

tliicctrd. or it 

iiiiiv lie ail indofsrini'iit pio 

liiltitiii;^ lurtliiT m-uot liitiou 


I'av 1). oiiK; 

I'iiA I), or onlt'i' I"' »<'ll<''tioii. 
Snrli iiu iiidoisf- 

•• i'av to A. li. or onl.T tor niv use. 
n.n.t ..iv..s thi- ludorsi... th. n;;ht to imMV. p^^v'-'''''^ ;• 
,,,, ,,iil,,„l tosui-i.i.v partv tlmt his iiuloisn-rouM 
havr su.-l. hut h.' .auuot. tran>hM. without .'Npn-s 
.H.w.T ..ivn, hv thi- hill, h.s n,uhts as indors.M- umln It. 

VHdov..niua....i-daM.-.'withsurh povs.M. auy traush-r 

,1,. irstviitiv imhus.M. in tvspnt of tho hill (0- I h.> 
icsttictiv. indovsiM. iHToiuos tlu. a..nt ol th. indovser m 

icspt'ct of the hill. 
A liokhn- who !u\n< 

itiates il l>ill piiyuhlc lo hoaivi 

tliout imlors<MU«'nt is s 

(h'livtMV wi 

di^liverv ; he incurs no 


tvlcd il transferor hy 

liahilitv oil til*' in 

;tnini<'nt. If 


h transferor ne-o 


tfie hill he wiura 

hn.nediate transferee hein,' a holder for^value. (.) 

lis to his 

the 1)111 is what it purpor 

ts to 1 



that he has 

Ir] Si'ctioll 'M (4). 

Tilt- ii( iciitoi- iiiiiy ) 

av ilii' iiiii"r.~t> 

on iiuitunty 

■li tUc 

[oiiilitiiiii iii'« II' 
[1] yoction ;!.">. 


I vut Ihhu fullilUil (s. '-^'h 



Ni;i.(»i r.M'.i.i. I N>i III .\u:m>. 

ii iijlii in iiaii-ltT It ; (III) thill ill ihf liim- <'l tli»', 

tlillislt'l- lir is lint .lUilM- nl illlV lill I wllifll ICIuloiS 

it Viiliii'lt'>s ((t). 

•t : •»■ 


i i 

Rights and Liabilities. 

//'.////>• -./ Ill- llahhi. Tlir liolili'l is il.'tilK'il as tllf 

|iii\i'i' (.!• iii(l'>!.sri' ut ii lull or not'' wlin i-' ill possrssioii 
III it., ur the Immivi' (.< ). Iloitlcis jiill into olio ol t ,vo 
divisions, \ iz.. tiiosc svlio .in' lioMfis in diu' cotirsf. aii<! 
t lio->(' w ho iirc not . 

A holiliT ill din' coiiist' i> niic who hiis tiikfii ii hill. 
(I) lomplct*' iiiid ic-idiii' on the liid' ol' it : (-) Ih'Ioh; 
it Wiis ovfitlui'. iiiid without uoii.T ihiit it hiid l>«'<'ii 
|»r«'A ioiisK dishonoiiicd. i! siuh wiis t!i<' lii« I : (•>) m 
•4ood iiiilh iiiid 1mi \iilii«>: iuid (1) without iioti.f o| 
iui\ drti-rt in till- tith- ol the |n'rson wlio iic-otiiitcd it. 
All ioui iiii- i(M|uisitf ('/) 

Thf lights of tilt" holder in {\\\v courx' iin- to sue in 
hi- own njiuii' lUiv or iiH ol tin' [tiiilifs to lh<' hill, iiml to 
do so tier ol ;in\ dt'lVini' (h'|)fndin,;: upon iin\ dclt'it ol 
titif in of iinv nicrc pcisoiud dflmri' iivjiilidilr to prior 
parti"s iUiioii'jst thcMiisclves (:). 

.\ holder who luis not oUtiiint'd the hill in dm- course 
lUiiv sue on it in his own name, hut is lial>le to he defeated 
l»v some defect of title, in his picdeeessoi.s or l>y defences 
of ;i pei'.soniil natiiii' avidhdih' iiuiunst them, other tluin 
set-oil ('()• ""■ '"".^ ■ li"'\\'"ver, iiuhuM- it to ;i Iiolder in 
due course, in whi( h ( ii.'^e the hitter ohtiiins u ^iood and 

['I) .Sort i. Ill ."iS. in .ScutlcMI -. 

(7) Si'cliuii l",<. A- to uJMt 1 iiii>titiitfs a ilclcitivi.' lilif, mi /;(»-/. 

•i ii'2'.l .\ |i:! '.'I! .-; tl'.!'. i^^ !l'^t '.I'.!'.'.'! ! M : l''-' \'-.<.i !!'J tilll' ill all. i?LL' 

(-) SiMlimi '.is. 

(iij ^jctimi •>» ; A,!' iiuiii. 'Sioiii (iS'iS), L. K. li E'l. Ull. 

( ! 

Till,!- nl I'Al II Wt.l. 


|ili'l(^ li(l<'; In" m;iv itis.i ic cive paMiHiil in «lin; 

>iiis»v jilKl inii\ uiV' 


IC |IJlA <'l il \ illlil iftt 

i|>i (A 


■ A liiiltltT (wIh'IImt fni' viilut' "I iMit). who ilt'iiv<',> liis 
iitic In il Will tiiroiiL:li II holdfr in »Iim' ruursr. iiiid wlm is 
iini Iiirnst'll II |»iirty to iiiiy fiinul or illi't:;i'ily iUTfctini: 
It, has all th»^ liulits of that hohh r in tluo (oui.m' as 
Is th«' iic(('|itoi' iiiiil all partifs to th<' liill piior to 


that lioldtT " {(•). 

From tho ahovf it is ch-ar that a lioldrr cannot he " in 
due coiirH*'."" iiidvss he is iiinoraiit oi any frand or iljc- 
jality in (••miu'ction with the l>i!l on tin* part o| tin* 
|(ci;oi\ who lu'uotiali'd th«' Idll to him. '///(/ iinh'ss lii> has 
hif for it. This, whit h is pio\idi'd l>\' s. I'U of 

i\<ii \a 


Art of ISS-J. is veil old law. 


M'lO tiio|li'\' o| 

not I' 

uri- paid liona titU*. and upon a va 


(! t onsKleru- 

iioii. th<'\ iwvff 

diall Ix'. Iiioiiuhl Itatk hv th<' Irnr 

M\\ lid 

lull wlicrr tho\ conn; mala iidc into a, |m!.-oi 

I s 

hands \hr\- ai<' in the naturti of spccilic piopcits : ami if 
iht'ir idfiititv can he tiaccd and asicrtaincd. the party 
lias a v\'J\\ to it'covcr (d). 

Tln^ dcl'fcts of tith' specially mentioned in the Act, 
uhich atTord an answer to an a(tion on the bill by any 
patty with notice of ihe defects ate frati<l. din 
I force a!\t 
>iile.iation. am 


1 feai|. other unlawful means. illet;al con- 
I (HMjotiation in breach of faith, or under 

circumstances amoinitinu to a fraud (c). 

Thoiiuh actual notice of these defects is. oi!. 
Mitlicieiit to invalidate the title of a pei.^on ( laimim; to 

i/)) SiTiuii) as ^3) 

^. ) ;-'rtliiii 

!• i:{). 

(/) liiinl .Nt\N>m;i.i>. in 

( l-irh 


1774), ('ii«|i. I'.»7, iit 

S. .U..11 2'.i;J) 


C lift c.\ii.iUrt!Vt 



t tiTin 111 Seuiih liiw, iiLii'ittd Ix'i-au.'M-- llic Alt up^jlita tt 
."Siot liiiul. 

i; i 

1^^ ' 



1 • 

;; • 

i ' 


'' f i' f ' 


Nk(.(»iiaiji,k Inm immion. 

Ik- il. Imlilcr m »lii«' <niirs«'. iiolicf will In- iiii|iut<'(l !<• liim 
if it, can lie sliuwu ttiiit In- iccr.ivcd iiiloriiiiitinii wliicli 
cast iiiK>ii him the duty <>l niiikiiiu imtlici' in<|iiiii<'s. and 
that li(ial»staincd finni doinL; so l»ccausc they nii-lit injni(^ 
liis title. However. " it is not enough ti» show tliat 
there was ( aieles.snes.s, ne^ii■ience or foolishness in not 
siispeclinu that the ! ill was wron.ii. when tlieic weio 
cireMnistan( es that niiLiht have led a. niuii to suspect 
tliat. All these aie, matters which tend to show that 
there, was dislioin'sty in not doiic.: it. hut ihcy do not. in 
themselves, make a di>feiice to ati action n|)on a l»ill 
of e..\cliaii-e "■ ( / ). Neuliuence will not allect the title 
of the holilei if his«'oudiict is. in fact, honest ( /' ). 

•• \'a.lual)le consideration "' in connection with hills of 
e.\chiUii;e means any consideiatioii necessary to s\i|t- 
nort a siinphi contiact (*/) or an antecedent del)t of 
liahilitv (//) : and where value ha.s at anv tinn^ heen 
tiivcn I'oi- a bill, the holder foi' the time heinu is di-eined 
to l)e a holder for value, as regards the acceptor, and 
all parties who ix'caine such |)rioi' to the time when 
value, was viven (/). .\nd as the law does not intpiir*' 
into the aile(|uacv of a consideiation. takiuLi a l)ill at a 
considerahle undervalue is not of itself sulticient to 
aficct a holder's title, thoULih in the circ\imstaiice.s of any 
particular case it may be evidence that he was not actin;.^ 

honestly (A). 

Stnnetimes a bill is si;^ned by a, person as drawer, 

( / ) Sirliun ',10 ; ./-/,( s v. (liinhni (l,S77). 2 .\|i|>. t'a^., id p. "'I'H. /„ r 
|,,.r(l Hi.a<k»ckn: MAbrx.Hun ( I7(tl ). 1 Sni. 1.. < :. (I2t ) .W.".. 

(,/) Sc.liou •!'. See iinli. p. !<>. If a clutUR' is paid into a baiilv 
,.11 the fdiitiii" tliat tluaiiioimi may l)Ciit cncc lira.wii on. the i)aiik is a 
l,u|,l,.r for valm- (Ex ,,nrl' liuhdah (l,SS2). lit (.'li. D. 40!)). 

(/() jSi (.• iu< to liu' « oiii iiMii l.vw. null, p. 2n. 

(I) .Section "27. 

^/l) .loHCf V. doi'lvn \\f>'ri}, ~ App. Cart. tiHi. 

lilM.S OK l"iN('llAN(;K 


!)i<il', t) 

r indorsor witliuiit coiisit 

Icnitiuii fur the \nu- 

pusi' t.l l<M»tliii<j, liis naiiu' 
ptsrsoii so siyniiiu i:^ ^m 
l)ill. uiul is insiil)staiut' 

to soiiio otlitT poison, 
accomiiiodiitiou paitv 

to the 

a suivt y for th<' jjersim uccoiniuo- 
.lated ; but a lioUl-r for value n.av sue the acronuno- 

(latioii paily. althouu 

1, h<' knew hiiM to l)e siirh whe 

It'iation. althoui^li 

took-th.'hilU/). The want ol cousK 
„ .IHnice auai.r.1 a hoKl.'r wlio has not uiven v 
,|n..s not .'onsl it.ite a .h'f.-. t ..f 1 itU- suHirii'nt to inv 






h olli'il hecoHit's 


portant to dcriWe on whom lies 

lli,> luinhMi ol proof of showniu 

hoiia li(h's ant 

1 th 

lh»' ordinarv rulf is 

ijiviii'i Ol valiM' 

<lio\vi\ lliat thi' acceptance, iss 



lie, or neLtotiation ot tlit 

hen it is 
f th 

dl i^ 

alfcctcd with fraud, dm 

lidhh'r (iiidcss lie 

is th(! 1 


CSS. or ilh'-alitv. the 
to whom the hill was 


Uv delivered (///)) must i»r( 
all.-cd fraud, etc.. value has in -oi 
for t 


that after the 

d faitl 

1 hecn uiven 

;i MO 

hi. instrument (/O- Hut until such ddcct is slu 
hler is deemed to he a hold.'r in ihm- course (,,). 
been said that to constittite a " h.o 


It lias already 
ill due course, 
il was overdue 
(lii,te is taken su 

he must have ac(|Uire( 

tur a 


wliicli IS neuo 


1 thi> hill before 
tiated after that 

to anv cl 

,it. maturi 

W. and henceforth none ca 

lefect of title affectinii it 
n uive a better title 

lian tJiev 


Ives have(/y). A bill l)avable ou de- 


ud is overdue, when it appears on 

the face of it to have 

,,.;,,i i„ ,irculation for an unreasonable time (7) : the 

K. n. S.-.4. 

(/) Si->ii')ii 2S. 

I,») 'I'dOiot V. I'"" li" 


{III) 7 ((('"'' V. \ I'll /5""~. '"'I ■•••■■ • ,,^-^,, ., II t V 

IM: 7W,o«v. //-.^A'M I SSM, .■>:{<.. I'.. '»• j'^" ,,,„,,■, ,.., 
., . • .1,1 (;i) NcM lidil .ill (-1. 

'"1 ^^■'■■""' -^ : ... .,.,.;. :.. „.., .,. in <!.■ ,.:,s,. .,f ,Mo,ni-...., 

Si'f /III t. \>. :!'jS. 



i i 

i ■ 


} f 

I 1 

! f 



A i 

V ' 


Xl'.COriAI'.f.K I VsTIMMKNTs. 

miil.iiiity of otlici' liills dopciids ii|t(iii their ditto and 
wordiiiL; (/•). I'iiviiit'tit Ix'foio matmity will , not dis- 
cliai'it* the l)ill. and il it is pnt in circidatioii iit'tciwards 
sutli paynnMit will Im' no answor to a holdor in due 
conisc (,v). A hilt known by tlic li(»ld«M- to liavc 1»o«mi 
dislionoiiit'd is (icatcd as rc^artls that holder as llioniih 
it wcif an overdue hill (/). 

1 1 till' hill is lost hefore it is overdue, the diawer 
may he conipelled to vivi^ au'ither hill of tlio same tenor, 
a1 tin; request of the person who was the holder ; the 
latter liivinu security aviunst the, claims of anv person 
who may h(voii,e possessed of the lost instrument (ii). 

A ca.-e of some jjeculiarity arises when the hill is 
negotiated hack to a holder, who has previouslv siiiued 
it a a drawer oi- indoiser. A. draws a hdl in favour 
of C. : C. indoisc-s it to ]).. I), t) Iv. and K. to 
A. in this ( ase A. cannot (Miforce the hill against anv 
intervenniLi party, foi they themselves have an exactlv 
(•orresp(»n(Iin'^ ri^hl aiiainst him (see lu'xt paragraph). 
][<} is said to he precluded from suini; on the i^round of 
•' ciicuity of ai tion "" ; hut he nia\ reissue the hill (x). 
However if. owinii; t(» tho ciicumstances. the holder 
would not have heeii liahl(> to the particular indorser 
whom lie is suiuu. then his own previous .sit^iiature is 
no answ<'r in the action. Kor instanci!. \. houuht t,'oods 
of I)., and ('. was to he surety h>r the prict; ; B. drew 
hills on \.. indor ed them to ('.. win* icindorsed them 

(>j litirh'flnr V. .1/. /»/.;-■ (IH12I. :{ (aiiip. !;•;{. 

(/) Section l!ti i.'>). 

(") Si-ctiun lid. .\nil ilic rourl may in mmv |hm( fidin'j; ii|M)n a liill 
ordor that tlic iuss hI il shall not lie scl n|p. pruv iiltd an inihninily Ik' 
ilivcn a'irtiii-'t iiie ilaini; nl .im ..tlai |ii!i'n n|i(>n tlic in>tniintnt 
I-.. Tiij. 

i.i'i Si rt inn :(7. 

\)[\A.s or KxClIAXfiK 


t(. 1>.. :inil i1 \v.'»>s » 
;i stato of l';><-1s nt 

i.'ddfd tliat ii> in 

lliis ciiso llioiT ^va^ 

i-iit.iviii- til'.' inK'ntiou of ivscivm-i m 

( . a riiilit of action a'iani 

.t I'. 


iciiitv of action 


Kl not avail as a .Ich-ncc \n an a( 


i.v n 




Rillhls of Port 

ii's (>• 

Ihn- th'iii lh>' llohin: Karli of 

1 lit' iiuloist'is o 

f tiic hill is liahl<> lo tlir holder, and 

anv SI 

d>sp(|ii»'iit iudorscr wlio pays 

ill at. niatuiitv 

( oiiclativflv each parTv w 

ho has i)\it his naitic to tiio 

hill inav ( 

laiin auainst any wiio picvionsiv 

a\c smiun 

it. wht'thcr hv wax of acc.'ptan^ 

drawmi;, of in( 



eut ; ''•.'/•• the drawe 


l;dl hack on the acceptor lor 


atioii -. the iiist nn 

the acce.i)tor and the drawer, aiu 

hut the acceptor ina 

h»iscr has his leiiKuly ai:ainst 

I so forth. Any partv 

V simi the hill .v'O/.v rcconrs. i.>'.. niay 

)iit Ins name o 

u the hill, expies 

,lv and on the instiii- 


it itself, (lisclaiinin,^ any ] 

Msonul lialnlitv. and 


partv takin:i after this is 
it will he seen from 

Ids is hound l»v the disclaiinej; (:). 

names attac 

the ahove that a hill witli several 
hed is a form of contract of suretyship {'0 

ho acceptor hein- the principal debtcn-, the otlier } 


hein.L; sn 

reties witii re^art 

I to each, other {h) : h 


tiilmtion inter se. 

I to him. but >ienerally not m 
hut thev have no riiiht, of con- 

riie indorser who pays 

a liolder is 

'Utitled. as a surety who pavs 

anv secnrities 

the creditor wonld be, to 

^ heUl hv the holder in rcsi)ect of the 

hilUrr'soif the holder a-rees to -ive time to the 
acceptor after maturity, tlie indor.sers wlio do not assent 


ii .\i>i' *^ •'^- '• 




■ ) 

1 i 

. > 




11 i 

■ 5 ■ : 
•11 ; 

■m M 

! i[ 

ati^ <li~;(liar'jO(l {(/). If llif Will Im-; l)ppn arroptod for tlio 
arrdtiiiiiodatidii of tlit* dinwr-r. tlio accoptor is lialdo to 
till" liol(l<M\ ]»ut lie has a riulit of iiuUMiinitv aiiainst 
fho (IrawtT. and the riulits of a siin'ty in ronnortion 
tliorowitli (r). 

Ri<lhi to Xotice of Dishonour. — Wlifn a bill lias boon 
dislioiiomod oithor by iion-acooptanro or by non-pav- 
iiiont(/). tlioro is. in fho foiinor caso. an inmiodiato 
ri'iht of rofoiirso a.ii;ainsf tho drawoi' and indorsors. and 
in tho lattor against tho accoptor. tlio drawor. and tho 
snooossivo indorsors : but thoso havo. in uonoral. a ri'iht 
to notice of dishonour, and those who receive no notice 
when such is recpiisito are freed from liability. Tho 
a.cce|)toi' is not entitled to notice of dishonour (//). 

The notice unist bo i:ivon within a reasonable time 
after dishonour, and. in the absence of special circuni- 
staiioos, those rule< applv : 

Ti'dip. — (i) Whore the parties, who are to uivo and 
receive notice respectively, reside in the same place, it. 
should bo sent in such time as to roach the person to 
whom it is sent on the dav aftoi' dishonour ; (ii) where 
they live in different places, it should be sent on the 
ilav after dishonour, or if then^ be no ]>ost at a 
Convenient hour on that dav. then bv tho next post 
thereafter i/i). Tf the bill when dishonoured is in tho 
hands of an n'iont. he has a similnr time allowed him 

III) T'nuhil y. Hfu'i-ii ilT.Sii). I T. R. |tl7. Sn- iit\ilir '■ Sl•T'.KT^■ 

SMll'." pi'l. |>. llHi. 

(- ) Hichirnii-' V. [.•(i'k (1872). L. Ii. 7 i . 1'., al |i. ;i77 ; iinli . 

l)|.. :i-_'4. :!i!.".. 

( / ) As 1(1 jiaviiipnt, sec /)n•.^ p. :i:!0. 
(./) Srctiiin -"12 ['.\\. 

Ih ) S.-. fir, II l'.iii2i. W'li. n ilu' 1( til r is (iliiy .i'iiiic :.: i ii ;u.:! |ii..:!ril. 
Mill- ri|iiirit ini>c,\nini|(> will nut ati'cc) tlir |i:irt\V rii.'lit< (>. tit (l''l). 

Hiu.s or ExrHANGr. 


wlujrcin to romniunirate with liis principal, and thon 
tl.e principal in turn has a similar allowance ; the agent 
may, however, give notice direct to the parties in- 
t..r(^sted (i) \ and each person who receives notice has a 
siinili., time after receipt of notice wherein to com- 
„mni( at,; with prior parties {k). Delay in giving notice 
of dishonour is excused if it is caused by circumstances 
l,evt>ml the control of the party giving notice, and is n(»t 
imputable to his negligence {I). 

To nvd B)f Who),> to he (Urn,.- (1) It should be 
-iven by the lioldcr, or by an indc.rscr who is himself 
nable on the bill, or by hu agent acting on behalf of 
.'ithor (m) ; (2) it must be given to the pers(m entitled 
t„ it. or to his agent in that behalf (n), or (if the drawer 
,„• iudorser entitled to no,tice is dead, and the holder 
knows it) to his personal representative, if there be one. 
;,n,| he can be found with reasonable diligence (o) ; nr 
(i|- 1,.' is bankrupt) either to the party liimself or to his 
1 rustee in bankruptcy {p) ; where there are twi) or more 
drawers or indorsers, not being partners, notice must 
1..' -iiven to each, unless one of them has authority to 
i.-ceive notice for the others {q). 

Xo particular form is required; writing, pers.,nal 
. omtimnication, or partly one and partly the other, will 
sulHce. provided that the identity of the bill and its dis- 
honour bv non-acceptance or non-payment is sufficiently 
indicated'; so also will return of the dishonoured bill 
to the drawer or indorser (r). When given by the 

(i) Sfiition 4'J (1:J). 
(i) Section 49 (14). 
(/) Section 50 (1). 
(in) Section 49(1), (2). 
ir) Section 49(5!— !7) 

(n) Section 49 (8). 
(o) Section 49 (9). 
(l>} Section 49 (10). 
(V) Section 49 (11). 
For examples of notices held suflicient, .see 

1 lialiners on I'.iUs of Exchange (8th e.l.), PP- ' .9-l«l. 

M 2 


• Hi 
I Hi 

ti " ' 


M ! ! 

. •.".•! XW!OTrAI!l,K InsI'I!UMKNTS. it fi;iin^s li.r ilio iMMielit of all s\il»i»Hjii<'nl lioMfis. 
1111(1 III ,1,11 piior iiKloiscis wlio liiivo a ligiit a<^ainnl 
I he |iiiii\ ii> wlioiii it liiis licon iiivcii : iiiid notice uiveii 
li\ nil iiMlnixT frimt's |..i tlio ln'ii.'IK, of ilif 1i(i1(I<m and 
jII iii(IiiI-i'I> >iiIis<'(|iii'|iI III llic |iiiily wlio li;is i<'ii'i\r(l 

IMll III- (■•>). 

NiilKr is iff|uii<'<i ill tin' L;<'ii<'ialit \ i>| i aso, and that 
l!ii-< slidiild It*' s(i is rIfiiiK i'i|iiilal»l<'. A iiiaii iiiay have 
mdMr>cd a Will away. \;iliii- Ut»(>, due nn S|ii't»'nil)»'r :}i(l ; 
il lie Ikmis iiutliiii'j aJioiit it Itv. say, Scptcinlicr i'ith. 
Ills M'liK'dif^ ii-iiinst |i;iiti<'s lia,l»l<' to liini iniuld Itcconio 
Itvss valiialih- or lie lust. I»y liis luMnu unal)l(i to ciilnni^ 
tluMii j»rniii|itl\ . 11 idtcrwards Ik- is asked to pay. 
i:reat. liardsliip niitilit Ix' inllicted npou him ; lieiKe the 
nocossitv (if notico of dishonour. But in iho following 
cases cither this would not- Jippl^ ■ '•'' t'l'^<' '^ <i;ieater 
hardship would bti in(li<t(>d on tin- holder by requirinf; 
him to uive not,ice. 

Thus, an omission to Liive notif'e of dishonour will not 
operate as a. disehaiue (a) wluut^ the bill i.s dishonoured 
l>v iioti-aceeptante, and notice of dishonour is not <:iven. 
the riiiht^* of a holdci in due course subserpient to tlie 
omission will not la; jirejudiced, aiid (h) where due 
notice, of dishonour is u;iven on non-acceptance, and no 
a<'ceptance is in the meantime ^iven. notice of subse- 
(pient dishorour by non-})ayment is unnecessary (t). 

Notice of disiiontuii is dispensed with in the following 
cases ((/) : 

(a) \\her<^ r(^asonal)le diliuence is used, but notice is 
imptissible. or do(>s not reach the person scmght 
to be charifed ; 

('•) SiKtion 4!t (:{), (4). it) St-ction 48. 

(») S.>rtion .^>0(2>. 

I'if.lS OK FiXCHANflF,. 


(I.) WluMO uoti..' is \^.'liv.Ml l.y tl..^ party rntillf»l «•• 

it; , 

(,.) \s ic-uras //(^' <lr<imr vvlieii -(i) <1i!iwm- aiul 
,l,awn>, aiv. the same |K'is<.n ; (ii) wl.nv. tl.r 
iliiweo is a lirtitiuus pcMsoii or a person liaviiii' 
„„,,iparilvtu.nntriMt; (iii) where tl.o <lraNvor 
is tlie person to whom the bill is presented tor 
payment.; (iv) where the .lrawe« or acceptor 
iJ as b.^ween himself and the drawer under 
MO obliizittiou to accept or pay the bill (x) ; 
(v) wherc^ tlH^ drawer hns countermanded 
(d) As re-ards th.'. indorser -(i) where, the bill was 
accepted or made for his accomnuxlation ; 
(ii) where the imb.rser is the person t.. 
whom the bill is presented for payment: 
(iii) where the drawee is a fictitious person 
,„• a person n..t havin- capacity to contract, 
to the knowh'd^e ot the indorser at the time 
of indorsenumt. 
In a well-known easel//), the meaning ot the word 
• Ihtitious •' was considered, and though the decisu.u 
was up.>n a ditferent section of the Act, the mterpreta- 
,i.,H Jven wouhl ch>ubtless apply to the word as used 
.u this section. The facts were these : C. Petr.d. & (.;. 
was an actual firm carrying on business at Constant,- 
„,,U, and Vucina, a foreign correspondent of Messrs. 
Vauliauo of London, was in the habit of drawing bills 
on Messrs. Vagliano t., the order of Petruh & ( o. A 
,.,,,,< in the employment of Messrs. Vaghano torged 

yx, Lm,i uteUuoc, wht „^...ommo<lati..n ot the drawer, 

t lu> t)ill wan acicpted for tne au o> > ' ^,., , . <• ,„■; 

N r.coTfABi.r. I \< tim m i-nt-;. 

I < 






Wills, put.tin'^ in liims.'lf tlio naiiH^s ..f Petridi & ('«• , as 
l.,i,\'....s. aii.l Vuciiia as .liaw.M ; to these he procurt'd 
-.Miuine acceptanc's of his Hrni ; he then fori^od the 
iti(l(.rsenfiit ot Petiidi & Co.. niakinu it an indoise- 
?nent to ii non-existin-j; poison, " Maratis.' and then 
t,ook tlie bills to tlie l>ank. and moived payniont of 
them across the (•.)unter. On the discoviMy ol the 
lofjeries, the .piestion arose, Who was t(» boar the loss ; 
and .or t,li<' l»ank it was iir-^ed that the bills, l.ein- 
payable to tlie. order of a fictitious |)erson. were to lie 
treated as pavable to bearer (:) ; the case turned, 
therefore, to a lar-e extent on the ineaninu of 
" lictitious " as the w(»rd is used in tho fiills of 
Kxchanue .\ct, 1882. The <<intcution was that 
" fictitious ■' meant '" fictitious with respect to the 
occasion," and that the more placing of a name which 
was actually borne 1)V somebody would not prevent 
that name from fjein^, in this sense, fictitious. This 
vi<uv was accepted by the House of Lords {<i). and Lord 
llKKsciiKLL said: " T have arrived at the conclusion 
that, whenever the name inserted as that of the payee is 
so inserted by way of pretence merely, without any 
intention that payment shall only be made in con- 
formity therewith, the payee is a fictitious person within 
the meaning of the statute, whether tlie name be that of 
an existing person or of one who has no existence, and 
that the bill may, in each, be treated by a lawful 
holder as ])ayable to bearer." So a cheque drawn to 
the order of a fictitious or non-existinji perstm may be 
treated as payable to bearer, althonuh the drawer believes 
and intends the che<iue to be payable to a real person {b). 

{:) Sroti.m 7 (3). (a) [ISitl] A.C. 107, at j). IT,;}, 

{!>) Cliilloti V. Atterihorov()h, 1 1S!I7| A. ('. MO. 

liiuLs OK KxciiANta:. 

liotl, tl.o al.nvc-menti(.no,(l casos sseiv. di«tin;iuish<'..l 
l.v Warrington, .1., in Vtnden v. Hughes {c). In that 
, t.ho plaintiff's clerk filled u|. cheques payabe o 
,h« order of certain (msto.uers with the ua.ncs ot the 
.ustomers a.nd sun.s of money which were not u. lart 
owin.^ to the,,,. The .lerk obtained tl,e plauitirt 8 
si.nn^ur. as drawer, forced the i„do,se,„ents .nd 
„.;.M,tiated the che.p.cs to the defendant, who took 
the',,, in uo.Kl faith and for vab.e. ft was held that the 
pavees we.e not " fictitious," because the d.awer be- 
lieved whe,i,iii the cheques that he the sun.s 
M,e,itio,,e.l to the whose na.ues appeared on 
the che.p,es. Bunk of Enghind v. VagUano was d.s- 
lin-uishod on the i-round that theie beinj^ no drawer 
i„ fact i,i that case, the use of a na,.,e as payee was a 
meie fiction. 

Proh'.t--\n the rase of an i.dan.l bill, protest, 
though souvetbnes useful, is optional, sav^ where 
acceptance or for hon.u.r is {d) But 
in the case of a fo,.M.;n bill (eY appearinii on the face 
„f it to be such, the d.awer a,nd indorsers are dis- 
rhar-od if, in the event <.f „..n-ar(eptance, the bill is 
nut prot.'sted; and protest is necessary also, it a 
foreiun bill which was not dishonoured by non-acceptance 
,s <lishonoured by non-payment (/). Protest n,ay be 
..vused under cir.-u,nsta,u-es similar to those mentioned 
.d.ove in the case of notice of dish<mour [g). 

Form oj Protest.- K protest must cmtain a copy of 
the bill, must be si.^ned by the notary makin- it, and 

i,) |l'.)0.-.l I K. I-.. <'.».'• «^'« '^l^" ^"'^'' "'"' ''''""' ""''^ ^'""^' '■ 
M„chdh. I l«.H)8i A. C. 1:57. 

(,/) S,. tlOll .'SI (I). *-''j . rl ni. 

ill i^ 



• »•» I 

Nki.ohaui.k Instim mknt>. 

iimst s|)«'(ilv tilt' |H'iMin at \vlii>>(' ri;(|ut'st tin- l>ill is 
pnttestod ; tlifi pliut^ and diitt! of ; tlic < or 
reason Un protest in.: tln! liill , tlni iltMimnd imide mid 
tlio answer <iiv(Mi. it any. or tlic fact that the drawee 
or ai«eptor rannot he found (//). The protest aiUHt he 
staiiiptid (/). If the services of a notary cannot he 
ohtained. anv honseliolihn- (»r suhstantial resident of the 
pUice niav. in the presence of two witnesses, ^ive a 
certilicate. siuned by them, attesting the dishonour of 
the l>ill. and the certilicate will in all respects operate 
as a foimal protest (/). 

Tunc for Protf'.sL -T\\e. hill shoidd he protested on 
the dav of ilishonoiir. hut if noted on that day. or not 
later than the next succeeding business day (/). it may 
he protested afterwards as of that liay {»() '. delay is 
excused if caused hy circumstances beyond tin; control 
of the holder, not imputable to his default, misconiluct, 
or nei^lii^ence In). 

IHdce of I'rok'st. A bill must Ik; }>rotesteil at the 
place where it is dishonoured, save that (i) when a bill 
is pn'.-ented throuvdi and returned dishonouicd tlirouj;)! 
the po.-t it mav be prot.ested at the place to which it is 
returned, and (ii) if the, bill is tlrawn payable, at some 
place ol busini'ss or residtMice (ttlii'i- than that ol the 

llil .S.iliuii .")! (7,1- ll llii- I'lll ii l".^t "1 >li-.->lM.\oil (.1- i.s wiuii.iiiully 
ililaiiifil fioiii tlic pci.-i.ii ri»tilli'(l to hdhi it, |nii1..-;r iiiiiy Im- made on a 
((!])>• Ol wiitliii i),iiti( iilais tlicifol (s. 51 (Si). 

()■) .Stami. Act, IS'.tl, s. 1)0 and y<li(<l. I. 

(/, t Section !)4. A s|ieiial fonu i.s gi\i li in tla Schnliile lo the 


(I) .Section :>\ (4) ; Bills I'l Kxehaiific (Time of Isotinji;) Act, 1KI7, 

"• '■ 

[ii,) Section !»3. " N-tiiiU' " i^ !!>' li'iii'i'c iii:iile !■> the iin!;u\ 

on whiih the iiolaiial eertilieato the inotc^l — is baseil. 
Sec Chalmers on Hills ol Rxdian^tc (Sth ed.), p. l!)4 
{11} S^-it ion .51 (!>). 


1)11. LS OF Kxt'llANt.t:. 


.liawe.'. and i< ilislHm..iir«(l l»y iioii-a. Ti'ptaiMo. it tnu.M, 
|„. luotoHtod at tli« place whor« it is ..xpicssud t«. b.) 
[layahlp (o). 

UabUd,/ oj Ih' Ain-ptot. Tl,.' diawee in not ..l.lipcd 
tu accept the bill, and m th.' event ..f rclusal is undm' 
Mu liabilitA' ..u it (p). If b« ciucH accept, he eni^a^^es f. 
linu to the tenor of his ac.eptance (7) an( 

pav accon 

liis whether or not he has lei 

I'ived consideratiitn. 



ptin^' he admits to a lu.lder in due course the exist- 

I'Mce o 

f the drawer. 

his signature, and his capacity 


1 authority to draw, am 

I it' the bill is payable to tlie 

liiiwer s o 

rd«M' his tlieii capacity t<> ludo 



the bill is pa\ 

,al)l.' t.. the order of a third person, ho 


Imits the existence o 

f the 1 

tavee. a 

nd his then ca[»acity 


to indorse 

ut'tiui neness or vi 

but these a< 

Inussions do not mc 

hide the 


V o 

{ the indor.seinents (/•). If he 

as j:iven his acceptance for honour, - mpra j 
t absolute, hut aci rues onl; 

iiriilt /<!, 

ilif. liability is no 
(liawt^e dots not pay 

ly if the 

and then only when the bill has 


l,...n dulv present.Hlfor payment ami di.shom.ured 
has been a.i^ain protested (the protest on 



IS t 


L' o 

f itself insufHci* 

nt). and of these facts he 
..ititleTto m.tice (s). His liability, wlien it attaches, 
to the h.dder, aiul to all parties subsequent to the 


|,v for whose honour 

the bill was accpted (0- 

Llnbitit>i oj the L>mMc'r.— He must pay the bdl if it 
is dishonoured by uon-acceptance or by non-payment 
on the part .)t the drawee if due notice of dishon..ur be 

^<l) yfciiiPii ot i'M- 

[p) Siectiou 53 ( I ). 
[If) Sectiou 54 (1). 

{«) Scclioa tH) ( I ). 
(t) Section tiO (2). 



\ i 


' 1 




■ ! 


I 'H 


•^iviMi ('/). Il liii^ Imm-ii |iniiit<!ii Diit that. " ii Itill ilmwii 
U[M»n il tliml [xiity ill (lischiiiL;"^ of u pn'sfiit dfltt mnv 
in truth \»' i«"^unh'tl iis uu otTfr l»\ tho duiwiM that, if 
tht" piivcc will 'jive liiiMi fi»r |»ii\iin'nt, lin will <^\\o mi 
nrdtT 1)11 his (Inhtiii (I In' ac ct'iitm ) t.i pay a ^iveii sum 
at il uivt'u time uud |ilii(«(. Tin' piiyi'c u^^nu's to tiiko 
this Mitjcr. iiiid to uivi- th«' tiMit; n'(|uirr(l. with )i proviso 
lhii> if till' ai' <'|»toi do uot a<(t'|.t. jind i)ay tlu* lull, 
and In-, tin- |tii\t'<' (or the holder of tlit^ Itill). liivc 
iiotict' to th»' driiw<'r of fhiit ih'fault. tlm drawer shall 
j)iiy hiui Mi«' lUiioiiMt spfiiticd iti tin- hill, with lawful 
iulort'st ' (./ ). lit' iiiiiy not ilcny to ii holth-i ni duf. 
(Kursc till' •■xi.stciuc of thv pjiyri'. aud his thtii i iipacity 
to iudctrse (//). 

Lidhllilif of till Itiiloisi r.- lie t'ui:ii,i:<'s. if the hill is 
duly |)r('s<>iitt'd iiud ilishonourcd. to corupeiisatc the 
holder ux aiiv subserjuent indorser. provided he has tlie 
requisite notice of dishonour (s). He must be taken to 
admit to ii holder in i\w course the genuineness of the 
si;^iiatures of the driiwer iind of the prevituis indorsers ; 
and he luiiv not <leiiy to a. subsetpu'iit indoiseo the 
validity of the l)ill. and tliiit he, a ^ood title to it at 
the time of indoisemcnt (z). 

A person wh(» si^us a bill otherwise than as diawer 
oi- iKceptor. thereby itnurs the liiibility of an indorser 
to a holder in due course (a). But such an indorser 
Miiiy not be liable to thti drawer. Thus, where the 
[>laintill's drew a bill on A. to their own order wilhnd 

(ii) Svf{ lull .")."l ( I ). 

I.I I IJroonr.s ('uiiiiii'Mi L,i« i.IUli III. I, ji. !'•''. 

1//) ScclJlHl ',i,t [ I ). 

(j) .Section W (J). 
(</) .Section Oti. 

Hills oh K.\chan«jk. 


,n,lo,:sin,, ,1, au.l A. ivturn.-.l it arr..,.).-.! it.ul lm.ko.l 
Uv tl..! .I.'f.'ii.latit tn mmruiit.-., |ui.VM.ont. tlu plaiutins 
..,,,1.1 nut HTov-r „M th« lull a.^uiust tW .iMfeiuiaiit. 
W h.Mi Mm^ plaintills n..„iv.'.l tl..' hill, it was m.t " com- 
|,|.,t« ami r...4..1ar -n tl.. lur- ol ,i,- a. it thnr 
„vv,i iivdorsenuM.t, u.i.l su tln-v w.-i- nnt hohlns m iluo 
,„uis«% iiu.l l.v tiMf law m.Mrl.aut ii .liawr, h li.a.l« to 
,,„ imlors.T. ai.-l not an iii«lois.T t.. a {!>). 

liut if a l.ill is a.M.-pt.-d aii.l inaoiHod m Maiik in 
uursuann, of an a.4mMiHmt bv tl.e iuaor.s...i- to bocoinc 
s„n!ty for its pavnumt. an.l is tlM'ii t'. the 
,„.rson in who.s.^ favour it was si^iiu^d. li.> may till iii 
his name as dravviM' an.l it. tmitm'. the hill as 
huvinji been indorsed l)y him to the ind..r.sin;; surety and 
t hen reiudorsed to hims- M for value (c). 

\s has he.Mi stated ove, each iudoiser may be, 
.ailed on to ,.av. bv way of indemnity, the whole 
auiouut (unless "he pn.tecti^d himself auainst tins bv 
I he form of his indorsement) paid on the bill by a 
subsequent ind.,rser, and the liabilities ..f indorsers r„hr 
.e will ordinarilv be determined accordin- t.. this rnle. 
liut anv special .-ircnmstanees may b-, cnsidered. in 
.uder to ascertain tht^ tine relations of the parties. 
Thus when A., H.. and ('.. directors of a companv. 
un.tu'allv am-eed with ea. 1, other to b.-come sureties t<. 
I bank "for a certain debt of the company, and in pur- 
suanco of that, a-'icement, indorsed three 
notes of tlie .ompanv. it was decided that the first ..t 
the three imh»rNers nee.l not indemnify the others, but 

,., [. IIolh>n.l.\\'M-M-2 Iv. I'-. I-': •^'"'' ^- •'/' A .W„.7 0S««'). - 'M'l'- 

'■',:/;;!;„,. V lirucc S,nUh, [VM^ 1 K. U. Wi7 ; an„nu.l. 
1 K. I). •-'<•.:$. 


Xk(!otiai{i.k Instri mknt.- 


i I 

- f I 


'■ ■) 

1 ; 

. ,! 




■I ;J 

tluit cacli was liahlt^ in a proportionate aiiioimt (J). 
TIh! riilt*. is that indorst'raents an? i)resuine(.l to have 
boon made iu tlui unlor in which tliev appear on the 
bill (e). 

Extent iif Ihr Linbild;/ on a Dishonoureil bill. — This 
(liticrs in the case of a bill dishonoured in the British 
Isles and one dishonoured abroad. The measure oi 
damages ou a bill dishonoured at home is (i) The 
amount of tiie bill ; added to (ii) interest from tin; 
date of maturity, or if th»! bill is i)ayab!e on demand, 
of ])resciitment for payment ; added to (iii) the expens(\s 
ot uotini;, and of any uoces.sary protest (/). On a 
bill dishonoured al)road the measure is {(j) the amount 
of th(! re-exchange with interest till the time of pay- 
ment (/O- ii'-, "the sum for which a si^ht hill (drawn 
at. the time and place of dislumour at the then rate ol 
exchani^e ou the place where the drawer or indorsei- 
soi|.j;ht to be charued resides) tnust be drawn in order to 
le.alisc at the place of dishonour the amount of the dis- 
honoured bill and the (^xpcmses consequent on its 
di-shcmonr '" (t). It has been decided that notwith- 
standing the above, if a bill diawn abroad is dishonoured 
at horn<! and the tliawer is l>y foreiun law under a 
liability to the liolder to pav re-exchan,ii,e. Ii<^ may, if 
the bill is duly protesttul. recuver such re-exchiin,'.ie from 
llie acceptor (/:). 

((i) Macdowdd V. WhUjuld (IS«;J). S .\i'l). «-'a3. 7;»:{, 744. 
(e) Svctioii 32 (.">). 

(/) Sect ilia ,'j7 (1). 8i'<' ro?^^, !>. ;>:<;>. 

I't) Tlic li()|(lir liati iHi i>|ilii)ii to sue fill (lir ilaiii.i;.'<'s |)i i)vii!c(l fiT 
ihr iM-i- ol ii (lislioiiouf at lidUK' (III ('i>iiiin<iri<il liitiih of South 
Aiixdalia (1887), 30 <'li. I). .■")22). 

(/,) Section 57 (2). 

ii) tScc Chalmois on Bills ol Ext liaugi- (»tii cii.), 220. 

(k) In It (ldh,<iti<-, K.c pnrU RofjurU {\SH1), \H (). B. I). 28*1. 

lilLLS »»l. KXCHANOE. 


II justice ro4uiic8 it, the iatoiest may lu- 
whotlicr the bill be an inland or a foreign bill (/). 


Discharge oi the Bill. 

The -loundH of dischai-o are these : payment bv 
,h.. aeceptoi (or sometimes by others), waiver, eaneel- 
l.ition, merj^er, alteration. In addition eerta.n parties 
,nav be discbai-ed by want of notice of dishonour or 
l.v omission to duly present the hill. 

ra>imcnL--ln order to operate as a disehari;.v this 
must be made by the proper person and in <lue course. 
I'avmcnt bv or on belialf of the acceptor at or after 
inaturitv will always operate as a discharge il inacle 
I, ,na fide, to the holder without m.tice of any defect m 
h.s title (m) ; payment by the draw(>.r or indorser does 
not. discharge the bill ; save that an acc.mmodation 
l.m is discharged if paid by the party accommo- 
dated {n). • , , , X I 
Payment nuist be mad.^ to the party i'utitled (o). aiul 
„ is on this account that the payee must be in the tirM. 
mstance a person named or imlicated with reasonable 
, MMtaintv, a bill may be made payabl.^ lo s(^veral 
IKivees jointly, or alternatively to one of th.mi. or to 
lU,". lu.lder of an ollice f.,r the time being (/>), and it 
n,ay be made payable to bearer, if a fictitious (.y) ..r 
non-existing person is named as payee the bill may 

[,ii) Sccliua 5'J. 

Suction 5!t (-2). ('■>) 

,) But see I'o- 

I, PI*. ;{5.'), :t3(i. as lo paymc 

lit ••> 

llk(_l ol .1 

niaiiil ilratt l>ed,iiiig a 

loiaoil iinlorsi-uieiit. 

:) S.fV.ltl'.m (. 


Sfo \'u'ilt'iiM lirwi. V 

Bunko) L,i'jiiuiii,aiik, i>. iilil. 




X Ki ;( n I V IJLK 1 MS I'RI MKM S. 



l»(^ t iniitrd as [);iyal)lo t«» boanT (r). I'liiiia facie tlu- 
holder is entitled to payment. 

'I'iic amount paid must 1m" tlu! coiivct amount, whicli, 
tlieiefoie, must he a sum ccttain (s). The hill is payable 
at maturitv. It is [)ayahlt' on demand, if it is so ex- 
pressed, or if no time foi- payuKMit is named, or if it 
is stated to Ix- paya.ble, at si-lit oi- on presentation; 
also if it is acctipted or indorsed when overdue, it is, as 
regards such acceptor or indorser. dt^'incd to l>c payable 
on d«Mnand {/). if it is paxiihle ii,t ;i. Ii.\ed |)eri()d after 
ilii.ti' or si^ht or on or after a lixcd period after any 
^p(M•l'i•Ml event which is i Mtain to happen, the date is 
di'tci mined according to th»' tenor (;/). 

A hill on demand is payahh^ on the day of demand, 
hut in other cases the time of [)iiymenti is dctt'iinined 
as follows : The day of [)ayment is inchuh'd. and the 
day from which the tim<^ is to lie^in to run is 
excluded (.r) ; in iuhlitioii to this, three days of ;Ljrace 
are allowed, and on the last of these the bill must be 
paiil (//). The wliole day is available for payment, 
I.e., in iM'ueral the whole, of tiit^ business hours of the 
dav (z). Pa,vmcnt may he made before it is <lue, but 

[I j Sccl iull 7 (^ii. 

[.-■) Antt. p. .'{lo. [1} S.mIi"ii le. 

('/) Srctidii II. It iiiul 1m' cil]>i I \i(l, lidWcvcr, ;i liill |i,i\ulili- 
I. II ,1 roiitin'ji-iu y IS l.^itl ; innl ><■>■ •-■ I -. .is i.>u;U"ls lillin.' ii|i tin,' itite 
wlii'il tlif iiistniiiiriil l)i'«ii issiK il mi'i.itccl. 

i.r) Srftiou I t rl'. 

iy) .Si>t'tii>ii It. I:i llii-s -t'ctioii will lir Inimd [irovisioiis lur the 
rase wlu'U thi' li^l day "!' iiiMic falls oil a Sunday or a liaidi holidav - - 
viz.. (a) if tin; la-t day nf liracc falls uri a Sunday, ('hiislmas Day. Good 
I'ridiiy "i- a ilay a.|i|)oiiitiMl by lloyal jiriiLlauiat inn as a puMic fast nr 
lliiink^'.'ivinL.'. I lir l>ill is liuc anil payalilc on I lie prci'dint; iMisinos;^ 
day : I'Ul (li) if tin- la-1 day of ^r.icc is a. Iiaiik linliday oliur llian ( li(> 
aliiivi'. '>\- if llir. l.i^-l day of L'ia,rc is ,i Sunday and the .--rr.ind day of 
-larr, a hank li"lid.i\. t lie hill is dui' ami p,>if uii llic buu'ocdiii^^ 
l>usiiie.~M rlay. 

i:) A', lui'nl'i V. I'/ioiim^, i IS'.il! -J 1^. U. 7.V.». 

Bu.i.s t>r Ex(m\Nf;r. 


,, will n..t, ll.r^n ..perate as a discharjfe oxrept l.etwoon 
,|,e parties to the payment, and will be no answer to 
I liolder in due course (a). 

When a !)ill is paid the holder may be compelled to 
a.'Hver it up to the partv payin,t^ it (6). 

Presentment for Pnijment is necessary (except in the mentioned below), and without it there is no nuht 
,., enforce payment against the drawer and mdorseis 
of the bill (c). but if the bill be accepted generallv 
„o presentment is re.p.ired t.. render the acceptor 

liiible (^0- . , , „ 

The '.me of presentment is determined as follows. 

,1 the bdl is payable on demand it nuist (to affect the 
,l,aw-M) be presented within a leascmable time after its 
issue and (t.. affect an indorser) within a reasonable 
n.M.'after its indorsement; if payable otlierwise then 
„ ,n„st be presented on the day on wliich the bill la Is 
,lue (e) Delay caused by circumstances beyond the 
.ontrol of the holder is excused if not imputable to his 
dt^fault, misconduct or ne;jlii;ence (/). 

The place of presentment is determimxl by the terms 
of the acceptance. If accepted payable at a particular 
ulace presentment must be made at the place named ; 
,1 the acceptor's address is on the bill, this (if no other 
place is specified) will demonstrate the proper place ; 
if no place is specified and no ad.lress ,iyen it should 
b. presented to the ac<.eptor at his place of business if 
kn<.wn. and if not at his ordinary residence ; otherwise 

S Slon'^? The aooepto,. ..lit always .,e„,anci tla- .xa.t 
carryin;? out of this «hity. S.c ■^ •>- (-)• 
{f ) Secliou 4l> (i }■ 


11 •> 

\'k<;uti \i'.i,r l\sri:inir:NTs. 

■ 'H 


1^1 ! 

it mnv bf })ios<'iit('il to»» nff«^j»tor at his liist-knowii 
iilacci I'f iMisiiioss (.1 K'siticiitf^ or to liiiiisolf wlierevor 
111! may l»«i luiiinl {k). Tin' pifsentiiK^nt must be iiiadf, 
li\ flic ln>l<l<M' or 1»\ soiin' |MTsun iuillioiiscd to receive 
|i;i\ iii'Mit i>ii his hehatl at a. i<>aso)iahh' hour on ;i, hiisiness 
<|;i.\. It must Ix' ma'lc to tin- |mtsoii ih-si^^iiated hy IIm; 
hill as pav'T oi to some |tersiiii authorised hv him to [lay 
or to lej'use pavmeiit, il such <ari ho loiiiid. It' there are. 
several <h'sii:natiMl )»avers and no place df |tayiiietit is 
specilied. then t,o all ol' them, unless thev :\Vi) partners. 
II th«' (lra\v(M' or acceptor is dead, preseiit.?tient must he 
?na<le. if possihhi, to hi.s personal representative. Aj^rec- 
nieiit or iisai;e ma,v authorise presentment throu'.:h the 

post ollico (/')• 

Delay in niakini; [)ie.sent meiit is excused by circum- 
stances beyond the contn 1 ot the liolder and not 
imputable to his default, mi.sconduct or ne5j,li,uence. 
Presentment will be dispensed with (i) where after the 
e.Kercise of reasonable dili^fence. it cannot be effected ; 
(ii) where the drawee is a fictitious person (t) ; (iii) as 
leuards the drawer, wherc^ the drawee or acceptor is not 
bound, as bet\s'e<ui liim.self and the drawei', to accept (tr 
pav the bill, and the drawer has no reason to believe 
that the bill would be paid if i)resented (j) ; (iv) as 
reii,ards an in(b)rser. where tlie. bill was accepted or made 
for the accommodation of that indorstw, ami he lias no 
reason to expect that the bill would be paid if presented ; 
(v) if it is waiveil. expresslv or by implication (k). 

The holder nuist. on jtresenttjient, exhibit the bill to 
thci person from whom paymetit is demanded (/). 


(h) Se(akm4r,. («■) ye- (.«/?._ i)_ 3:! I. 

I )■) K.ij.. It a« l)ti w<-.-ii I'iu-iu it IS ,vn drcomm.-KiaiMii uih. 
(/.) Sw-tion 411. 

{!) SectidH 52 (4). 




PuymerU. for //o/»o»r.- If a Will is not paid o1 
.Maturity it becomes dishonoured by non-imyinent, and 
tl„- hold.'i iniinediat.^ly uc.|uin-s his coiisiMimMit li-lds 
,,.jM.Mst the pariirs. It il lias bm. prolrstrd for non- 
|M.\ioeul. anv person may inlcrvn.- and i)a,y il loi tlo- 
|,„noiM of any |.ar(v bald.' lli-^r.-on .h for ssho.^r a..-onnt 
i!,,. bill is drawn (m); tlf iiil.MV.'ntion is tbrn called 

• paynieid- for l.on ;" iind lli.^ payer steps into the 

|,laee of the holder, to the rxlent ol Lis ri-lits a-ainst 
t!„. defaulter and those who wen- liable to him ; parties 
subse.pierd to the party b.r wlmse honour the bill is 
paid are diseharued (/^ : this - paym.-nt b.r immuir 
npra fmlesl" must be attestcnf by a lu.tarial act of 
„uour, which may be a.ppended to the protest (o). 

The Amount Payuhle is j^cuerally the amount due. 
with interest, if agreed. Interest runs from the date 
,,f the bill, <u' (if it be undated) from date of issue, 
unless the bill otherwise provides {jt) : a partial accept- 
ance makes the acceptor liable only to the amount for 
which he has accepted. When the drawer pays ol^' a 
certain part of the amount, is the acceptor fieed fw 
lanto or can he be sued for the whole, the holder being 
then liable to the drawei' for the excess recovered ( 
in an action by a holder a-ainst the acceptor, payment 
l)V the drawer or an indoiser of any i)art is no answer (q), 
unless the bill is an accommodation bill, given for the 
accomnu)dation of the drawer (r). 

Waiver. To constitute this a discharge of the bill 
tlie holder must absolutely and unconditionally renounce 
„«,) Section 68(1). <«) ^'"'■1'."" ',!**, -l^'' 

(7) Sccti 

/) Laznnui v. ('owf! 

(IH42). :^ Q. I'. tiiO: Cook V. Ais^.r (lHti:() 

■J L. J. V: V. 121 (s. .-.!>(:!)). 




1 If 



Ins liulits auiiinst tin' ;i( «t4)t.M- ; and li<* must do h». m 
writing, uiiU'ss the »»ill is deliv»'i»>d u\> t<i the acceptor. 
It the bill is allowed to r»-maiii in ( iroulation. lemmcia- 
tioii is no del. -nee as a-aiiist a holder in due course who 
has received no notice ol the waiver (.s)- At coininon 
iiiw accord without satisiaction does not ope:at.e to 
discharge a partv iioiii lial.iiitv. unless a release under 
seal is i;i\'n; tin- law merchant did irot adopt this 
principle and peiniilted tin- liohler of a hill to di.schar>>;e 
the acceptoi without consideiation ; ami. subject to the 
couditious a,l>ovc mentioned, the .Act has reco-ni.sed the 
pciculiai' rule ol ihe l;i.w' mei-chant. 

CanccUnlion {/). Cancellation discharges the person name is cancelled, and also all indorsers who 
would have a ri'.:ht of a<iaitist him, 
(1) the cancellation was m)t intentional; or ("i) wa.s 
made without tl\e holder's consent; or (3) was nuide 
bv mistake ; the burdtui of provini? that the cancellation 
took i>lace under these conditions is on the {tarty 
seeking to sui)port the bill. If the bill as a whole is 
thus camelled, all parties are dischar-^ed. 

Alteration («).- -Material alteration of the bill or 
acceptance witliout the assent of all parties liable, 
avoids the bill, except as a<j; a paity who has ii\ade. 
authorised, or assented to the alteration and except as 
against suiistniueut indorsers. If. however, the altera- 
tion is not apparent, tlie holder in due course may sue 
for the amount of the bill as it stood before alteration (a). 
Material alterations are. inirr alia, alterations of date. 

(.<) .Section t>2. 
{!) Section (W 

(ft) hi'ction t)4. 

,) S.v Scludli'id V. /•.'"'/ "/ l.oiid' thorough. \ l« 'I .A. < '. "il ». 


I'.II.I.S OF ExrllANCF. 

HM.oiuit tii.u', and pluco ..f |.ayin«'nt. cr tlio ad.liliun of 

irct'ptanct' was jieneral 

The altoiatioii imi: 

t 1)0 inatoiial. In (Imntnl v, 



a<'f.'iidant .si.Liiit'd an iKccptauc*'. th»> ainonnt 


o l,.|t ill l.lank. l.ut th.- (iLMiivs in tli.> niar-;in wnvc 
/. : 111.' drawer lilh'd n\> lli<' l-iH f'"' 

>;| I (In. »*)' 

t:ir,| (I.S. Ik/., and alt.-iv.i tlu' ti-nr.'s to in 
roir<'s|Hnid. antl it 

ilk*' tlicn 


li'jnrcs n< 

dcHul.'d lliat tlif niaiL'inal 


t iM'in- a niatfiial part of tin' Inll 
no doicncf io an actiiMi liv a l>oii: 

I 11(10 

jltrijilion was 

lii.ldoi- (z). 

'I'Ik statnto and tlioso aiv in acconlanro 
will. Ml.' ol<l law on tlio snbjoct. as laid down in tlio 
Masin- V. Miller {a) : in tliat cas.'. .\siirKST. .1., : ■ 1 <annot soo anv roason wliv tlio princi].!.' on 
wliicli a d.'.'d wnuld liaw Ikmmi avoided sl.onld not 

(■n-'o oi 

■ xlond to tlio oaso of a l)ill ot oxclian^o. 

All writ Ion 

.untracts. wliotiior l.v dot',1 or nol . aro iniondod to l.o 
.iMiidin- ovi.lonoo a-ainst tlio paitios ontoiinu into 
tliciii. Tlioro is no nia-io in panhniont or in wax : 
,H,d a l.iU of oxclianuo. llion-li not a doo.l. is ovidonco 
,.r a contraot as iniioli as a do,"d : and llio piincii-lo Io 

!..• oxiraotod from tlio casos ci 
,i\i(ids tlio (((iitiart. " 

tod is. tliat anv altoiation 



cliaruo tlio bill, t'.;/ 


Tlio aooopto 

'iid.M' soino ciirnnislanios lliis will dis- 
whon tlio acfoptDr hoouinos lioidor 
a ft or inatiuity (h). 
liack tlio hill with 


lull in Ins own 

ri'dit- at or 

r ninst. liowcvor, rocoivo 

ISS'5) I*' Q l'> I'. :''•'■ 

!7!ti I. 1 T. It.. :ii !■. :i;ii. 

('/I { 


in) ( 

{h) Section 


I ! 


ij I 


! f 

1 i 1 


Ni-r;()Ti \i;i.i: In-^timmkxts. 

.1 li.Jit, •."....! ;i.Mill>1 11m- Woll.l illlil llMl suLjOft t.. tll.l1 

,,| i,nv ..ih.T iMMsnii. sn tlial if il i.- t niMsfci ir.l t(. liiin 
williniil cunsi.l.Miilmii ill I'ihikI of ii i>i.-vi(.us lu.l.ln- lit 
,luo cumst'. he will .still iviiiiiiii liiil»l<' on it (c). 

Bills in a Set ('/). 
I'.iUs iiK- t'iv<ni(-iitlv .liawii in a s.'t. r.n.. two. llin'". 
,„ „„,..' pans. a,n.l it t.h.'v an- tumiU.Mv.l and k-I'.t on." 
,,, ,i„. nlli.T. tlir Nvhol.' ol tl,.' parts .■..nstit ill.' ..IH- l.ill. 
■|'1„. ,li;,\v.'.- sIh.iiM a.c.'pt on." pari oiilv. aixl. it In' 
iuc.'pis nauv liiaii on.', h.' will !.<■ liaM.' on .'a.'li part as 
,l,., It w.-r.' a srparal.' hill, sav.' wli.-r.' all -.'t into 
,!„. l,;nuls ..I uti.' liol.l.'r : li.' should not pav unh'ss th.' 
;Mr,.pt.'d pait is prodiic.'.l to him. ior if ho do.'s s... ami 
,l,„t pari is .■v.'iituallv pirs.'iit.'d hv a hol.h'r in diH' 
,,,„rs.'. h.' innsi p;.- auaiii. If a hohh'r of a .s.'t iii.h.r.s.'s 
,liir.'r.'nt parts t.. .litV.'ivnt i).'rs..ns. h.' is lial.h' <.n .'ach 
|,.„, ,„, ,1„. lull anmnnt. a.iul so will 1m' all snhMM,ii.'iit 
indorM'rs on the parts tli.'V in.loiso. Suhj.'.t to^th.- 
;d,..v.'. paMiu'iit ..f ,.n.' part di.s.'hai-os th.' .s.'t. W Ihmc 
two ..r moro parts of a s.'t aiv lu-otiatod t.. .UtlVrcnt 
i,.,Kl.'rs in .111.' cours... th.' In-hl.T whoso tith'. a.rnn'.s 
is as iM-uv.'cn such hohh'rs .l.'.'iu.'d the tin.' ownor ..f the 
l.ill : ,ut thi^ must m.t i>r.' all.'ol th.' p...siti..n 
of a poison wh.. in <iu.' cour.s.' a.-.^ojus or i)a.vs th.' (list 
part pics.'iit.'il to him. 

Foreign Bills. 

An iulan.l lull is om- whuh piirpoits .m the face of 
it to 1.0 hoth .Irawn and payuhlo wiihin tho British 
l^K.s. or to 1..' drawn within th< !u. u|""' ■^"""' l"'''""''' 

, I .V'(-/' V. l>' l-'nr,li'.\ mi'u, -' ^^ I' 

i. ) .' 

((/) JSfl 1 U'll 71. 

Hn.i.s or K\rn\\<:i: 

.> I ( 

)CNi(|('ll1 IlKMflU. 

I till' (•uiitrjiiv ii|»|ifa 

Auv nllicr Itill is a Iniri-ii i'i 

r (I 

11 ilic liMO <>i it. a l)ill may 

ticatod l»v tlic liold.'r as an iiilaiitl hill ('). 
TIm' form of a foiri-u 


liill usuallv (lilftMs Iroiii an 

inlaml l)ill. tlif toriinT Immii? ( 

drawn, as a lulf. in sets. 

and at ont- or molt' iismi 
allowed 1»\- cnsttim as Ix'lwct'n 

(Ts (/.<'.. the timt' tor pavmenl 

iIk' coinitiv of diidl iiiid 

ill.! coiintrv of uaAUH 


red, |»i(»t<'s1 i> 

lit). WIk'II a foivi-ii l>ill IS 
tinc-.-ai \' save as auiimst 

I lie ac(t'|ito! 

Ill tlx' ra.s»' 

)f an 1 

iiland l)ill it i- 

iipt KilUU 

diHi«ultv to d(Mi(h' wliat law 
foroi-n l.ill. wh.'tli.-r tlie law of the phuf of 

It IS a iiia.ttt'r ot sonic 


.ha.ft. or <»f the place of pavi 
tn this are to he found in s. 7 

lu'iit. The tides iclatin'^ 
I nf the Kills of KxcliaiiL^e 

Aft. 1882 : their main n'siih .seems 

to he that tliO law 

1h! plaee where th<' aet i> ti. he done, is to he th<' law 

>veriiimi the |»erfonnan( 


England, accepted in France. i»aya 

e of tliat act. c.'/.. a lull tirawn 
hie 111 Jlolland : 

•r<* Knulish law governs t 

he diawinii. Kiencli law the 


Dutch law the pavnient (.7). 

Agreements intended to Control the Instrument. 

ll sometimes happi'iis that a-reements are made hv 
,he parties at the time of acceptance, indorsemeut. etc.. 
and those, if in writing, may have an elTecl as hetween 
ilie parties to them, and as re.uards those who taUe with 

((■) Siijtion 4. 

I /■ ) .StHitioiw .51. ."i2 (3). , , . , , (■ 

is7-,) L 11. lOQ. H. .V-'.-.; T,u,l.,,s. r<;/,«iM IH.54). 1 N. (.. 
• K-'ii \. \K .-> <•. I'. '":!■ ■\'"' ^'""•'' ""' ■^'■*- '" " •''"'■-"'■'■• 




1 ! 

1 ii 


i I 


Ni..;.mAi'.i.r Isiui'Mi-.Nrs. 

nnti... ul tl .,.v.M>M"Ml. If ll.- a..|.MMn.'nt. is . un- 

,..n.,M,ra,..-uu..n.luntl..t .•:....,..• lM.,.r..v...i. lor .tw.M.l. 

,„. ^^,, ,,,.-i,i|.i to v.uv a vsiitl.-i. n.sln ..t l.y oral 

,..„i„,.„,. iM.r ..xaM.,.l«-- -I ^^1'"" >^'"" i^ v.v.-n tl..-n. 

i. ,„. o,a.l a,..".- nt l-Uv-.M. tho .Inuv-T an.l ih" 

a..-,.t.,. It sl.all 1m-'.l. or it uIm'M a not. m 

,„.Moil i>a..iv.-ai.Hw.M.ntlM'|..v n.i >Ma.l<.-i tl.attlio 

I,,,..,, shall not 1m. liaM.- il '^on.U to 1m- s„,.|.l..-a do not. 
:,„.\vr, a wanantv. .-Ih-. t rannot Im- ..ivm to snrl, a--ir..- 
,„..„t. iM.ans.. tl..-v 1 1,.- .outrarts .untain.-.l 

I, ,i,,. l.iil an.l not.' to pav at ni 

atniitA-. As h.-tw.-i'n 

,,,„.| t,. all.-.t ii.ini.-.liat.- \>m\u'. oial .-vi.l.-n... inav Im- 
,,iv.-n 1.. >how ili.-iv was n.> or 1.. sliow 

,!„, ,!,.. .l..l,v.-.v wasn..t nta.L' witl. tl.o int.'nti.m t Itat 
,1„. hill sh..ul.l o|M"ial.. as a (-..ntTaci , oi that ii was 
,,,„„l„i..„,l. ,., ,„ show that th.- rontia.t has I n 

(lis(har<j,t'(l (/')• , 

\,-nt a-n-.'.n.-nt i„av In' nia.l.- t.. varv tl.o 

t.,.n,is. an.l will hiii.l all who hav n..tir.'. hut il is u 

I'lvsl, a:.i.'.'nn-nt. an.l nuist Im- sn|»i»on.'.l t».v ••oti- 

sidi-intion (i). 

I, suin.fini.'s ha|.|"-n^ that a s,M'rial a.^nnHit is 
..,,,,,,,,1 i„io h.-1w.-rn th.' .Iraw.T and ar.vj.tuf. whon-hy 
,h.. turnu-r nn.ln tak.-s t.. ..iv.- c-itaiM s,-cuiit i(-s t.. the'fl.. . ■..,., jM-nsat-'hin, in th.- .■vrnl of h.s not hnn- 
,„ i„ |,„uls h.-lni.-tlH- n.atntilv of th- hill. Il thoso 
,„,,i,s h.M.nn.- .an th- hill hohl-r .hum 1.. 
,,,„„. iu tin.l-i this a.iau--in-nt an.l tak.' tlr' s-cniitios 
,Kivni-nt ..f his hill ' If ..n- ..f th.' ]>aiti-s i-ntain 


.) I', ("s: ■ !'">'/ V-. 'MM lis:.)). !,. i:. •• » . i'- •(- ■ /— '•' v ■'""' 

r.ll.l.- til KxtllAM.K 


.Kriil tins is nut ii matt. T of iinpnitiiiif.', h.-> 

||,«> litililtT 

\\\\\ 'J,l'l |t.l.\lll<'ll 

.111,1 il(«"|>tilf l»(M(illlf IMSli 

t, Iron, on.-: I.ut ii Im.iI. .Iiuu.t 

Iv.Mit. th.> iiisc. l.n.Mncs 

iiniMHtant . am 

I „„ ..nlin.nv ||.l.-- tli-' 1>"1'1<''' ^^"" 


.icni to have no i 


Wdriii;/ (A) H|>|> 
• Wln'i.', as lictw.'.'ii 

ty. Tlib 

lii iiiiil 

|„.s. This lias iMM-ii >t..t.'.l tlins(/) 

i> not till- law 

i^lit to ihr s|M'(iiif .Nt'.iiil 
Tilt' ml.' ill 

th.' (liiiAv.'i im.l til.' ii<.<'l 

cptoi" ot a 

lull o( cx.lianu. 

Ili't we'll t 

a ..viiritv lias. \>\ viitii.- ..f a .•oiiHact 

1„.,„, iHM-n s|M-.ilM;.llv appropiiatcil l.. nn-.-t 

I liiis lif.'ti Io.1-.m1 lor that 

hat Uili iit matiintv. aii^ 

• III pose 

l,v till- .liiiw.T with til.' ii('''l 

itor -. th.-ii, if ooth 


r and a.c.'ptor ln-coiii.' ms. 

ilvcnt. iiii.l tht'ir cslat.'s 

ill.' or.niuli' II 

n.l.-r a t.>i.'''l 


Oration, lli'" ''i 



M.'.r. tlmuJ. n.'ifli.T |'i<it.v m'T pnw t.. th.' < ra.l. 
. ,'ntitl.'..l to hav<' tl..' sp,'.iti.allv appi-op".tt'-<l -•'•""<> 
,,,,,,i„l ,„ „,■ pavni.'ul ..1 tlu' Kill. A.ul 
L..I.. sai.l lliat ■• if tli.'t.' lias btvii a -••ii« 

( or ION, 


ritics to nit't 

ippr.)priatioii ot scrii 
V. iip.iii U. til." st'.uiiti.'s mil: 
Ailh th.' Mil.'. ■" ( 
^l'(•u^iti<!s an>. s.'ii 

t tin- l)ills drawn liv 
;1 h.' appli.'d ill a.fordanc.' 


If th.' 1 


n 1.) wh.mi lli«' 

docs not ap!> 
mi (ihj.'c'tioii, t 

t,. iis.'s th.-m f.'i- liis own pur| 
Iv ih.'ni to th.' IhH. an. I the s.'iid 
hen th.' nil.' .h-.'s ii.-t apply (/')■ 

>os.'. a 

cr raises 



rule is .if ail uiuisiia 

risi' t.) iiianv . 

1 .haracl.'r, and its applicatK.n -ives 

Uiri.ulti.'s; for a full (•..iisidoiati..u sec 

(Irani on 

Hankinu ( .'.1.). l»l». <18:'> -<■'«<;. 

(/.■) (I si.-.). 

I'.i \f-. :u".. 

(/) \i\ Mr.^. "(Ui'tK 
ISS.'>),'l4g,. B. I), lill. t" 

I"') ( 

I lis Dia-iT, M.i:.. ill /•-'■'• /""•'' J"''" 

18S.-.), It ^^ 15. !»■ '■-•-:5- 

) In IX Oiill((nljiir<i Ctiiiiiiitrci 

,tCu. {\b>>\U li'J NV- I'- ^■^»- 




.i lO 

Nl.'.'MI \l;|,|, |\>||;i .\|1,,M>. 

Ill s. 

' IIKt^l Ks. 
TIi.-I!iIUm| Kx.Ii;.,,.,. \.t, |.sS-.,|..;.UsM,|, ,1,.,.,. aii.l 

'"^"1^"'- IMVal.l,. ,.;, ,|,,MUI|,|; Ihr .IrlinitiuMofu hill of 

-N' .;,v..n i,, tlu- A.t .,.,.Ih.,s to .•hn,n...s (»). ^,,.1 
- Ll.'.inullv .In .11 iMuvisinus ol t Im- A.t upj^Muhlr to 
•"Is ,,Hv.iM,. .,„ ,|r,„H,Hl. ..x,.,.,,t as oMi... wis,> ,,iovi.l..,| 
111 Part III (ss. 7;j ,sj). 

•^'"■"''"" '"'^ ■'''"''•'^ ' -' "U.I. ,.| t|„. hi.t.WV nf 

Whni a ,i„,,,n,. ,. ,H...,.ut..,|. il,.. |,ani,or nmsl nnv 
" " '"• '"^-^ lii'i'l^ in Ins IumhIs lM.|.,n,ii„ ,„ ,|,« 
"•^^-(7): "•''--,>.. I,.. lMv..„M.s|ial.|,., o an ur.iMM at 
I '•• >_nil .,1 ih,. ,■„>..„„.'. |„r ur..M.J„|lv ,lishun.„ni.,.. 

I In' "•,,('c|l|,. (,•). 

.'''" '"•'''"'• "' " ''""I"'-, ,>M,s.n. i, tor pavMi-Mi. 

7""" '^ '"'^-'""••l- inu ■ its iss,,,. (,s-). a,nl if fin, 

;''''^^'''' ''^ '•"""•■'' ^" 'II'- liMH. ,.! .M.I, ,,r.-s.-„(. Mif -s 
''••tw.M.u luMisHl ..ii.l ,1,.. iMnk.T „, |.,v.. tlM- ,.|,nnM, 
IKM.l. an.l ,1 ..vviMu In nnn-,.n.s..„„„..nt uitl.ii. a ivason- 
^^>l" II..M- \u' is .la,,l (,,,.. |,v ,|,. i„s„lv..ncv ..[ 
l;l"^ '"'"l^'M). 1... is ,lis..|,n,..,l t., ,1m. amount o|' th. 
.lama,.,.s„n,.n..l: im s„.l. a ru.s... ,1... hoM.-r ,nav oMain 
■l'"''-""''^' I'"' <l'"Hio..,ini. against the l.ank.M- (/) 

A l»aiil<.M-s auth.Mirv lu ,Mv a .•iis,..„,..,.-s ,1....,,... is 

!• A,.,,. (.,.. !..-,, I nl;,'.7;i' ;'-""' '■ ' V-W. /;./,,U,-,/ r„, ,|ss».. 

w) ■}"'■. ri>. 2'.i7 ./ w,,, ' 

I '-I M'ir.'lii V. li ;//;„, „. , is-m . 

i/) Setlioii 7t ( I I, i;ii 

< II I. VI !;.•>, 


n\uLi"(| (i) In (•nimlt'iiiiiiinl nl pin iih-iiI ('0 ; ('•) '»\ 
ipilicti <>| lliti (ustniiH'i 's tlfjitli ('0 : iiiul (iii) l»\ iiotiro 
ilijit iIh! nisliiiiifi liiis comiiiit' A an " jiviiiliildf " art 

mI l»iiiilviii|»t(v. Ill' iiiiiv ivliisc to |)iiy 11 clifii 1 iiii 

.Midiiiit wliicli is I III- siiltjffl lit ii uiiriii^lii'"^ iiiilcr (/). 
A rln'(|ii»> is not iiii fipiitiiMi' iissiuiuiu'iit. of tin- iliciwiT .n 
ipivliiiifi'. iiiiil ucnmliii'ily ;i third piUlv liiis no ii<j;lit of 
,i«tiuii iiuiiinst a haiikiM- tor ri'fiisiiij to lioiioiir it (>/). 

Crnssnl Ch'nnis. -A clu'tnif. aiioss tin- laci* oi wliicji 
I wo paralli;! liin'^ art' tliawii (Itctwecii wliirli tin' words 
■"and ('onipaiiy. ' or aii\ al)l}ri!\ iutioii ot tlii-in. may \w 
plari'd). is st\-|rd a riosscd cluMiur. A ili<'i|iic ( lo^.•^('d 
:.'iii!iiilly (oiitaiiis tin- al»o\i' nulv : a rlir<|ur tiossril 
^|>fiiall\- toiitains tin; iiaiiK' oi a haiiUi-r in addition, and 
llirii is .>aid to III" crossi^d lo tliat liankiT (:). 

'I'liis cid.^sini: (wliii-li is a luiili'iial |iiiil oi lli«: 
r|iiM|uc ('/)) may \w addi'tl to an iiiuTossrd rliiM|iii' Uv 
llu: drawiM' or the Imldiu-. and ciliii-i nia\ turn a -I'lnTal 
into a. spnial rro.ssiiiL; (/;). A hankt'r may » onvort an 
iiiicrossi'd rhi'inic into a cMtssccl onr. or a ;:f:u'ral 
ciossiiiL; into a spiuial rrossiuM to himsrlf {h). ll<' may 
ri5-rioss a sjH!i-iallv itossi'd rh«':<iin' to anotln'r IninkiT 
lor (.■olli'ftion {!)) ; in no otiior case may a spcciallN- 
crossod (•lit'<[iio !>»' crossfd to niorf. than one hankrr. and 
ii it is so, the duty of tin; liankrr to whom it is |ii»'s«'ntcd 
is to ii'I'iisi' payment {r). 

When a eheijue is crossed it. must he paid through a 

I") .Sc'ctidii T'l. 'fiif lianivvi i> iinl li.iimil 111 .I'l oil ,1111111,111111. nil 
i.ili'il IrlcjilMlli iCiirtiif V. Liiiiiliiii. (tl;t <""' Mulliiinl limik. |l!ins| 
I t\. I'.. U'li.J). 

(.) Itixjns V. \\l,itil<:i. [\v,'yi\ A. C. IIM. 

1//) :^< /iiiKih I \ . I I iill'ii Uuiik- iij Lniidoii {\!>1\>K M i<. T. (00. 

(-. 1 .Set mil 7i>. {>J) iSolimi 77. 

((/) ticctiyii la. \>) JSccliou 7'J it). 


(1 ! 

•i '• 




K I •;: ; f J i ■ 

1 !flO 



Hi i 


■) >-, 

\l,i.')l IAUM; I Nsl in Mi;.NJ',-. 

I»,iiiki'i'. and il it is cinsscd s|M'(iall\-. !lir(ii!i;li tlio l»a.iikc'- 
\\liits(! uaiiu^ is (in it. I''<>r satcU' s saJ<(^ tin' wni'ds " mn, 
ii<"4(»t iaiilf. all' ultiMi addiul, aiid altluui'^li tln'V do not 
a.iyiTt the t.i';uisl'('!id)ilit.v ot tlni cliciiiic tlicv litiiit, ii.s 
iinL;<>t ial)lii clnLiarrcM'. iimkIci irij, a t lausJ'i'tcc lial>l(^ lo 
!iav<' set. ii|) a.'ia,iiist Iniii the delects of titio availalil." 
against, u prcviniis lioldcr. In tiio words of tli<; Art 
■' lie, shall not have and sliall not Im- capalilo of L:ivin'4 a 
lii'licf title to the clieiiue than that whirji llie persou 
from whom InHool^ it had (d). I"'rei|uen(l\ tlHMhe(|nc 
is further crossed "" acroiint. of A. I').,"" in which case il 
will, ai-coidinu to ihe dii'cci ion. lie paid into tliat account 
at the hank' 1i> which the special crossinu refeis. 

.\ liankei who pa\s a cheipie drawn on him olliei- 
wise, tliiin aceoi'dinu to the iid.s.sin'j. is hahle t<» the true 
ownei- lor iiny loss he nia.v In .■^uch pii\- 
ment. (/■). If the crossin'..: i^ ol)literated, oi- if the 
cheijiie appears not to he crossed, and not to ha\"e lieeii 
added to. or altered otheiwise than ni aceordance with 
the ,\it, then il till' liankei' aets in 'jood faith and 
without ne'j,liuen(e. he i.s nut responsible, if he treats 
the cheipie as unero.^sed ( / ). |>nt if Ik^ pa\s in con- 
ftuiiiity with the ci'ossinu in L;ood h and without 
n(>L:;li^encc. he is placed in tlu! same position as if he luid 
paid the true owner, and if fhe chemie. ha.s reached the. 
payee, the diawer is entitled to the same protection (//). 

((/) .St'ilioii Nl. Il, SI I'lM^ I lu> I- till- "Illy uiy in uliirli ,i rlnijuc 
|>.i y.ilili- III Hiilrt 111 Ipciiici I im 111- iii.iilc nut ni:i;iit inlilc iXiitiumd 
/ii'ink- V. Silt, . I Is'.M I I t.l. li. »:5.">). 

(I ) Section 7!». 

( / ) SiTtinn 7!l iL'l. 

(;/) Sn 'ion .SO. IJy >. 17 uf tin- Ucviiiui; Act. ISSIl, tlic |)i(itccti<iii 
i whiiii u.i,^ . liiiiiiii li ill i hfijiii .^ "uly ) i.- i \S( iiiini [,, i.iin r uihuuh-ul^ 
drawn mi biinlvcrs. iiml ititcmlcil In cn.ililr iiii\ \k-' m to oliUiiil 

IMVIlU'llI of tili-;-lllll Micnl i'lni'll lllcKlll. 



A collpotinji; Itar.ker is i)rutf'(tPil in dcalini; witli 
nossed cheqiU's by s. «2 ot tlit> Bills ..f Exclianue Act. 
1882 (h), which enacts that " wheit^ a banker in good 
laith and without neijligencft receives payment for a 
customei (i) of a cheiiM' ; r(.s>ed «.',enerally or specially 
to himself, and the c .-tomer has no tith^ or a defective 
title thereto, the ban m shall not ncnr any liability to 
the true owner of the chtMiiK^ by reason only of havinu 
received such payment." The cheque tnust Ite crossed 
when it c()iiics to the })ankei',s hands (k). \otwith- 
standim' sei-tion 21 of the Rills of Kxthiiniie Act (/). 
where a hankie; collecis a, cIkmiuc drawn nr indorsed ]ier 
l)ro. he is not neuli;:ent nifrdy bcciuisc lie does not 
inquire into the aiith<>rit\ of the drawer or indorser : 
section 2t affects rights and liabiliiies whih> the l»ill is 
current and ceases to operate when the bill has been 
discharged by payment, sect. 82 deals with rights and 
liabilities after the bill has been .so discharged (ui). 

The protecticm conferred by s. 82 was held to be limited 
to cases in which the banker rectuved the cliequt^ as a 
mere agent for collection. Now, a banker may and 
often does give the customer immediate credit for the 
cheque with the intention that the customer shall be 
entitled to draw against it. before it is cashed. Such 
uiving of credit of itself constitutes tlie banker a holdei' 
for value of the chequ.e. and he cannot then be con- 
sidered to receive payment for the customer (k). 

(/() SeeaLsoKevi'iun^ .Ut. 18S:J, s. 17. 

(i) Whethor a ixrson is a " eustomer " witliin the iiieaning ot thi.x 
section id a qu. stion of fact, but he must have sonic sort of account 
with the bank (Grenl Wi-^krn Rail. Co. v. London and County Bankw,j 
( o., L1901] A. C. 414 ; Com. (as. 275). 

(<•) Capital and Counties Bank- v. Gordon, [ 1003] A. ( . L4(>. 

(/) Po8t, p. 3 4. 

(m) Morimn v. L. C. d- W. Bank; [1913] 3 K. U. 3.j<.. 

M.L. ^ 







■ >■)] 

\i:(;<)Ti \P.M'. Instiu'MKNTs. 

Ill (;nii.s('(|\itMi( I' ol till' (locisiuii ill (torihni's Casf nil 
aiiKMidiiiu staliiti' (/') was passed, \vlii«li cuacted that 
■ A IjauktM' it'ctMvus paviiit'iit id a ciiisscd rliotnK! for a 
tiistitiiuT wiiliiii llif iiicaiiin;^ of s. S'J of Mm Uill.s (d 
l'iX« liaii^e A<(., l.SiS2, iKdwiMislaiiiliiii; lliat lie irtMlds 
Ills (iistoiiM'r's arcoiiiit with (he aiiioiint of llie i hei|ii(; 
hid'oid leceiviii;; |»ayiiicii). tliercot." 

It is not (deal how far the statute, alters tin'. |tre,vioii.s 
hiw. It eertaiiiK [irotects tlie haid;ei where tho im- 
liiedifite (-reditilij; of the < he(|iie is a IlKMe. l)oolcd<eei)iiii; 
eiitr\'. Iiiit does it do so ill cases when* thi- credit L;iveu 
c.oideis a nii/il oil thi' ciistoinei t<» draw against the 
iJKMlue hefoie it is cleared ( 'i'his difliciilty will no 
doiil)t come liefoie the. courts for solution. 

l'''in/<'ries. This part of tin; suhjtMd allects hills and 
other iustnmients as well as clie(|iies. The following 
roniarhs. iinle.-ss expresslv evcepted. apply u,eiieially. 

A forireil or uiiaiit lioii>ed signature is wholly in- 
operative, and no iiL;hi to retain the liill or to ijive a 
tlischarue for it or to enforce [)ayiiieut of it can be 
acquired thiou^li or under that siguatiiie (o). But to 
this there are exceptions, for the acceptor and indorser 
are j)rechided from ih'iiyiii!.; to u holder in due course 
the nenuineiiess of the, drawer's siL'natuie, etc. (p) ; 
aii<l a title aecjuired aliroad liy a forced indorsement 
imder circunistances wdiich i^ive a ;^ood title according 
to tiie law of the country where th(- transfer takes 
place, will he re<oM;nised and acU'd upon by the Knji;lish 
coHits (7). 

I") riu' Bills of K\r|i,ui-i- (Ciosscd ('lu<(iu'sj .\tl, l!»0(>. 

!:)! Si'ction 24. 

(/>) Aiitv. (»p. :{.15, M.So. 

(7) Hiii'itrii-fis V. A)i'ili>-Aii''liiini Bunk, [liKl-'ij I K. 15. ti77. 

Tin' tad tliJit tlio forijei'v was raiis<>(l or !a( ililalcd l>y 
!li<' iioifligenco < f the acct^ptor is not. ol it-^tlt', a. roasoii 
In! lioldiiit^ hihi liable on a [((li^ed bill, ovcti to an 
iiiiioci'Mt holder for valin'(/"). lint in th(^ case of chociues 
.1 riisioiiii'r owes a special duty to his hankc;- to take 
icasonahlc proca.tit ions against foij^ery, and if the 
( iistouKU' uc!j,lij:;ently draws a cheiino with spaces which 
can bo iitilisod for the purpos(( of fiandidcnt alteration, 
and the amonnt of the cheqne it fraudulently laised so 
as to mislead tin! haidvcr, tlu; customer must beai' the loss 
caused by payment of the che«pu! as alteied (,s). Apart 
from any nf^^jlect of dnt\' on tJie part of the customer, a 
lianlcer who pa.vs a fori^ed liill or clieipic cannot debit, 
his customer with tlie amount (/) ; and when the amount 
ol an instrument has been fiaiubdentiy altered the 
oanker wh<t pays it can recover from his customer only 
1 he anu>unt originally placed thereon («). 

Although a customer ow<\s a, duty t(» take ieasonal)le 
care in issniiiL"' cheques not to mislead (he banker, ther* 
is no duty on tlie customer to take, precautious in the 
-eneial cours*; of carryimj; on liis business to prevent 
fori^eries on tlm part of his servants (x). Thus, a 
banker could not debit his customer with the amount of 
a for!j;ed checpie because the latter lia<l left his cheipie 
l»o()k in an unlocked drawer (y). 

Hankers payinu on fnnjtil hidorHcinen's sttuul on a 

;/) Sclinljhhl V. /•,'(/■/ "/ Lnmlf^huroiiiih. I I Milt) I .\. ( . :,\A. 

(.s) iMiidoii Joint Stwk Hank v. HaiiiiilUin, [l'.US| A. (.'. 777, 
,i|i[)i<ivin<5 Young \ tiroli (IS27), \ Hiiil'. '17>i. 

lO HdmrU V. Tnri,,\ (I.S.-,I) Hi (,». 15, .-,(1(1: //„// v. /•»//</ (IS2()). 
.-. H & C. 7.".0. 

(h) Hall V. Fullti, ■'iiipra. 

I.r) Ke.piiuidlln J'aliln r /•./•s^i^.v, l.iiiiilnl \, SntiuHdl I'mnk <ij India, 
iUHHt| 2 K. 15. 1(110. 

{)/) Hunt of friliiHil V. Kmuf' Trwln-i (l«.).'i). ;i H. I, » 'a.s. ;<«Vt. 

I r- ' 




Nrf:oTr\r'.r,r, TvsTrT'AirxTs. 

■•/im'wlinl ililVt'it'iif loutin'^. Serfiuu M ]}vn\\doA lluH 
;i h.uiktT wild pays in ^'ood faith uiiil in tlu^ onlina' 
r'uiuso itt' husiiiiMs ;i ( hequf, hill, or titlior diaft oi, 
himself to oidor nu JiMiiaiid. bearing a forj^ed indorse- 
nu'tit. IS doetiKid ti» iiavc |);iid in diu' course. He is, 
fhorofon*. not liable to his customer foi' the amount. 
Only bankers art; protected by this section (2). 

A person paying money under a forced instrument to 
a. bona, fide pavee uia\ inovef it, if he was not nedigent 
in making the paAiiient. and if (he mistake is discovered 
and (hnnand made for repa\ merit before the jiosition of 
the pavee has been altt^n-il ; but as (!ven the delav of a 
day may seiiously comprot>\ise the po.sition of a man of 
business, it se -ms in practice tiie paver will seldom be 
entitled to siic(e<'d {(i). P>\\t as no title can be made 
through a forced indor,s(!menl the true owner of a bill 
may ret over the pioceeds, even from an innocent third 
partv, as m<mey received to his use. oi- may recover 
da.mau;es f(U' (umversion from any person wlio has 
wrou>ifully dealt with the bill so as to cause him l<»ss (/>). 

Post Dating. — A post-dateil cheque, bearing; a penny 
stamp, may l>e sued on at maturity, notwithstandin<4 
the provisions of s. ."{.S uf the Stamp Act, 1891 (c), and 
it may be validly negotiated before the due date to a 
holder in due course (d). 

(z) Ogden v. /.V /((/.- (1874). L. U. !> ('. P. r>i:i. 

[a) Sue CV«A-.v V. Miistcrman (1830), »( li, ^S. C. <.»02 ; London and 
Uivir Pliitc liiink V Hank of Livnpool, [iSilli] I Q. B. 7 ; I Com. 
('as. 170. 

(h) Arnold v. Cli'-nu Bunk (187(i), 1 t'. 1". IX 578. This nius^t. of 
coiasc, bo \infk'r.stoo<l .sulijept to the protection afforded by the Act to 
hankers. CJ. Rdvinx v. London and South M'pstirn Hank, [l!MM»| 
t i}. H. :2T0: 5 Com. Ca'<. 1. 

(.) Royal Bank of Scotland v. Tott4:nham. | 18!»4! 2 Q H. 715, 

|./) Il'itrhrork V. Edwards (1889). •'.<» 1.. T. ii:!(i. 

rHU.\llS&t)KV NoTl'JS. 


I'komissory Notes. 

A pioiiiirisoiv note is dotiucd by tlic Act tu l>c (c) 
■ ail unconditional promise in wiitini; made Ity one 
[)erson to another signed by the maker, engaging lo 
pay, on demand or at a fixed or detcrminHble luture 
time, a sum certain in money, to, or to the order '1, a 
spocitied person or to bearer." An instrument in the 
loiiu of a note payable to makers order is not a note 
until indorsed by the maker (/). If on the face the 
note piiri)orts to be both made and payable within the 
British Isles, it is an inland note ; any other is a foieigti 
notc(/). The usual form of a promissory note is as 
foUows : 

ji;.j(i. York, August 5th, 1880. 

[TiireeJ mt»nths alter date [or on demand | I 
(SiAMi'.) promise to pay A. B. (U' order [or bearcrj 
fifty pounds. 

A. ¥. li. 

Here A. F. G. is the maker and A. B. the payee ; 
when A. B. puts his name on the back he becomes iiii 
indorser. The difference between a note and a bill 
are manifest ; a bill has three original parties, a note 
has but two. 

The contract of the maker is to pay the note according 
to its tenor, and he may not deny to a holder in due 
course the existence of the payee, and his then capacity 
to indorse {g). This liability may be joint, or joint and 
several, according to the number of makers — for any 
number may jointly make u note— and their liability 

(i ) tJicliuu Sl>. 

(/} bCLtiull bo. 

(;/) iScctlou bS. 







il<!I)eails upon tho tenor' ol' the iintc. Tims. " 1 |>roinisr 
to j);iy. (>tc.. siLrned l)y more tliaii one [xmsoii. is a 
joint and scvt'ial promise (h) ; " v,(> jointly a,-ree." etc., 
is a joint promise. Then; is no liability till delivery 
ot the note, for until tlien tln^ instrument is ineom- 
pletft (i). 

Pre^r)iiiin'nl jor I'lii/intiit. 'I'liis is neee.s.sar\ in sonu^ 
• ases. and then the lormalities as to time, place an<l mode 
of presentment should be o])served (k). A note payable 
on demand, which has been nei^otiated. is not deemed to 
lie ovi^i-due lor the purpose of aflectini; tlu> holder witji 
delects of title of which he had no notiic. 1)\' icason 
thai it ap{)ears that a icasonable time for present in;,; it 
has elapsed since its issne (/) : but after indoisement^ 
it nuist be [)rese!ited witliin a reasnnal)le time of the 
iudorsenuMit or the indorser will be di.schaiucd (m). In 
this ros{)ect the law relating' lo l)il!s and to notes liilTers. 
A note made pavable at a j)articular place nuist ho 
presi^nted for payment at that plaec^ ; in any other ease 
presentment for payment is not necessaiy to make tli«( 
Tuaker liable (») ; but it is ;dv.iiy.s noccssaiy to make 
the indorser liable (o). 

(kncralbj.- Subject to the nficessar\- modificatioiis, 
the provisions of the Act as to bills apply to notes, 
except as above, and except tiiose relating to : (1) pre- 
sentment for acceptance ; (2) acceptance ; (3) acceptance 

[h] .Sciiioil Ho. 

(i) Section S4. 

{k) As to those, sti- ((/(/(, pp. :;4i, .',',V1 ; iiu.l sec s,-. ssti, s". 

yl) StxUou 60 (3) ; Ot'i^coc/. v. Bdll^ (1890), 24 Q. IJ. h. I.;. 

{m) 8ec;tioii 86 (1). 

(/i) Section 87 (1). 

(o) Section 87 (2). 

Hank Nutks 


,>///)/•/< protect : (1) Itills in a sot (y<). And protest of a 
turiMi;!! unto <>ii (lislmnuiir is not nocut^sary (7). 

Ill applviiii; stu-li provisions to noto.s. tlio nuiUcr ol 
lilt' noto coricspoiKls to till' acctptor of a l>ill. and the 
liist indorsor of a noto corresponds to tlio drawor ol an 
iicct'.plt'd I'ill pa.v.dil(' U> diawor's ordor (r). 

I5\NK Nori;s. 

'I'lit'Sf are pioniissoiv notfs issued Uy a ltank«ir. |)ayal)le 
u> hearer on demand. Tlieir properties \vei<^ ronsiderod 
111 the hiadini: case of Miller v. Rare {n). where Lor<l 
M ANSFiKLi) recoiinised them as nc<,'otiahie instiuments. 
• Tliev are not ^oods. nor securities, nor (Uxiimonts 
toi' (U'bts. nor are so esteemed ; hut are treated as 
mouev. as cash, in the ordinary course and transaction 
nt business, by the jicneral consent of mankind ; wliich 
L;ives them the credit and curiency of money, to all 
intents and purposes. They are as nuich money as 
-uineas themselves are ; or any other current coin that 
is used in. common payments, as money or cash.' 

in a later case. Denm.\x. J., said that Bank of 
Enu;land n(»t(^s differ from ordinary piomissory notes 
and notes of other banks in two important character- 
istics, viz.. they are always payable to arer without 
indorsement, and they are legal teudin' for the amounts 
K'jire.sented by them. lie did not consider that the 
ordinary rules relatinu to bills would of necessity relate 
to bank notes, though they do relate to promissory notes 
generally. In this particular case he decided that the 
alteration of the number on a bank note was an altera- 
tii>n .sufHcient to discharge the bank from liability on 

(/;) Section S!». 
(r/) Soetioii8<t(4). 

(r) Siction H!) (2). 

(«) 1 Sm. L. J. (I2t!i ttl.) .".25. 

I i 

' : 


' i 

!l I 


.NK<:or|AIU,l, I.NMKI'MKMS. 

I In' iMilr. iIh.iiuIi IihiI tlic iir<liiiiu\ iiilc |ir('\ iiiird, mi 
.illfijitioii aDrrtiiiLi IIm' (niitract, luiviiin Im-cd niadc. Mi«! 
Iiiil)ilily \v(.iil(l have it'iiiaintMl (/). So also, in .S'/(//i// v. 
/^^//^ f>/' luii/hnid {>!), .Iksskl. .M.H.. sai«l : '"A Bank ol 
I'jiuland note i.s not an oidinaiy coinineicial contract 
lo pay Mion(>\-, It is, in on.' sonsc. a proinissor\- note 
ill ti'ifus. Imt no one can dcsciilx' it as simply a proinis- 
sorv note. It is part ot tlic cmicncy ot the country. 
It Ikk ioiiu Ix'cii mad.' so ]>y Act of Parliament, it is n 
IcLial (cjidci lor an\ sum aliovo £.">. and it nmst Ix; 
issued to aiiv one wIk. luimis a certain cjiiantity ol 
liiillioii to llie. bank, and demands it. as ho lias a ri>'lit 
to do, lor the purpose ol' usinn it as a currencv " (/). 

|/i /,-.-/.v /;„,//. \. ir-///,</ (iss:;), n (^». i;. |>. s| no 
!•') (Iss:2). !i (,). I!, |>. .-,,-,;,. 

(i) I'.l ■ .-)•>:;; iUnl -I r i( niillk:: of |>jii:ri, I...I., ;i( [>.;,>,',. 

' ■! 



-I ) 


liNauUAWC'K Ji.i.s iiccii stilted to l)c a toiitiuct oitlnH to 
iiulciimily agciiu,>t u lu.s.s which muy arise upon the 
huppeuiiig oi .some event, oi- to pay, ou the happeiiiiij^ 
ol .some event, a .sum ol money to the per.son insiueil. 
The instiument containing the contract to insuie is 
lalled a policy of insurance, the person insured is called 
the assured or insured, and tlu; person who insures 
is called tht; insurer, assurer, or tJie underwriter, the 
latter term being used chielly in ihe case ol insurance 
(M marine risks. 

There are ukany lorms oi tiiis contia< t, lor a man may 
Hgiee to aisure unytluiig, from a pane oi glass to hio 
own li;e : but the three lorms oi greatest importance are 
Lije Insuiancc, Fire Insurance, and Murine Insurantc, 
These will be considered separately. 

In Curler v. Boelmi {y). Lord .\iAM«FiELD .-aid, 
Insurance is a contract on speculation " ; and this 
being the case, it is Irequeutiy hard to distinguish, as 
regards principle, a ci'iitiact to insure irom an ordmary 
wager. In Godsall v. iioldero {z), Lord Ellenuorouuu 
said tiiat insurance was in its nature a ccjutract ol in- 
demnity, as distinguished Ironi a contract by way oi 
gaming or wagering. This means that it is not an 
agreement to pay money on the me.e happenmg ol a 
certain event, but to compensate the insured lor any 
damage suliered owing to its occuricnce. This -tate- 
meut, though true ol marine and tiro insurance, doci 

I,'/) 1 t>iii. L. (J. ^1-tli I'd.) i>u(i, 5i>U, 
( * 1 am. L. U (12tli cii.) S6.',, ZH), 

t^ 2 




; { 

\ i 





f 1 


l-i ': : 

W ^1 

f ■'■ L I .' 



i.N -I K \M I, 

imlr ill iiir.ili'K ili'^riilic I Ik' I Mill litct nl III"' lli.>iii.iiii f : 
the la(t<'i i^ an fiiu.i'jriiicnt \<< )i;l\ a iritiiiii siiin I'l 

llli)l|C\' Mil llic (It'iltll nj a pclMill. iillil \vl|( II iilKM' llM'll 

i( is (•iiii-,taut ami iii\aiialil<' ("i. Aiintlit'i ilistiucf icii 
su'jiir.-tcd is. thai in fli«' <ii-<' ol a \vii'u»':. llii'ft! is no 

ilUcii'st ill tllf If.-ull. i>| the (Aclll clititlih'j tu ((Ull- 

piiusatii'ii il it (l(,i's tun, dccuf. wlifH'; . in ail iiismann; 
coiitiiuls such ail iatcn'st must cxi-t. i.e.. thfio must be 
what is stvh^il an iiismuhh; iiitriot. 

ll has just hccii said that in snmc I'l its Imimis the, 
■ (.iitrai'l is <>ui' ol iiult'iiiiiitA . ',</.. A. iii.-uit's a hniiso 
a"aiusl hit' Ini; iu cumsf ol' tiiiu-. siij>[Ki.-t' ihf. 
Im»usc Lii Ih- ImhiiI down; il t"'"t<> will icslciv il. lliat 
anu'nni and that ain'Uint nnlv i an he nhiaincd. "" 'I'lie 
\rr\ iiiimdalit'ii; in niv oitini'in. ni even I'lilc whitli ha.-. 
Iic.'ti |iii>niiil;:att'd and ;Rted iin hy the ennrt ^ wilh 
ic^aid ll' lUMiianre lau is tliis. \iz.. that the <i'ii1ia't 
ol insutaiiit' ((intaiufd in u marine or liie poliev i.-- a 
roiiLiaet 111 indemnity, and ol indemnity only, and that 
this cnnti'aet means that the assured, in lase ol a loss 
a;;ainst whieh the policy has been made, .shall be lully 
indemiiitied.. hat sliall never be mojc than lully indem- 
nilied (6). 'I'luis. A, a.'.ieed to sell a house ttt 15. h-r 
to.l'H*: and liad insured tlie premises against lire. 
l5elorc eomph'tioii ol the eoiitiael to sell, the luiuso 
was burnt, and the insurain e. company, notha\iii>; been 
iulornied ol the coutratt ol sale, paid the, amount ol 
daiiia.ue ; subsccptently the purchase was ( ompleled, 
and the vendor tdjtaiued the full value a<;ieed, and it 
waa decided that the amount ol the. insuiaiice money 

{i(} ijuibij \'. I (■ili,:ii >liui Lih.'tu::. Lij: [ :i:n n: n'.i. Cu. (ISjj;, io C. i'. 
:!(v : 2 Sm. 1-. ( '. J^lh cd.l at |). 2i:i. 
(/.) JSui.rr, l...t, ill ( ■i-t'll'iir V. I'n-^lo)' (l^s;!). 11 (,». I'.. 1'. ;,fe. 


N Air III, <»l ( UN I I, At I . 


iiiiisl. Im' irliiMilfd to tlif loiiipiinv (r). Ill uiviiii: 
lii(lu;iii»!iit. HowKN. L.I.. sui<t : " \\ liiit is icully tin- 
lllttM•^st (tt thi'. vt'ihlois. the iiMsiiic*! ? Tln'ir iiismahlo 
iiittMt'st is tliis iln'v liiiil iiisiiii'd ji'jiiinst lire, iind thcv 
had tlirii ciiiilrailfd with thr piinhast'is t'of th<' sah- 
<>t th<- liuiisc. and. atlfi' tin- tuiiliu't. Imt licfoif coii.- 
|ii»!fi(»n. th(! tiie ociiii red. 'I'hfir iiiti-icst. tht'ifloic. is 
that at, hiw tliev art; tliti io<;al owners. l»nt tlit-ii hcneticial 
mterpst irt that ol vendors, with a lit-n tor the un|)ai<l 
|iiirthtise-monf*v. That was decided in the easi; o[ 
( 'iilliiiiiridfie V. Hoijul K.i('h(tit;/r .Uifnmncc ('ofjinralion (d) ; 
l»rt (an the\- kt^ep the whole, having h>st only halt ' 
Siireh it woidd lie iiionstious to say that thev rould 
kiM'p the whole, haviim lost ordy iialt . . . Tliev would 
i«e 'el till;; n wiiidtall l»v tlie. tire, their (ontraet ot iii- 
■-uiaiue would not be a eontiact a;;aiiist loss, it woidd he 
a speeidation lor uaiii " (» ). 

Coiiliaets of insurance are nhcrriina Jidii. and eserv 
laet of any materiality must he disclosed, otherwise 
there if* jirouud for rc-cisfjion. '" tJood faith forhids 
eitiicr party, by concealiii'.: what lie privately knows, to 
draw the other into a baiuaiti from his iynorauce <d 
that fact and hi.^ Ix^lieviim the crmtrary " (/) ; and in 
bhe,S(5 contracts the rule is stiictly enforced, as the facts 
are .:enerallv within the knowledj^e of the insured alone. 
Thus, spt^akia.: ol nunine insurance. .Nnioidil saxs (7): 
" The j)rinci})le is now liiinlv estahlished that the mis- 
representalion from mistak«'. iiiiioraiice. or accident, f-f 

(<•) Canldliitii, V. /'/v>/.>/( (iss;;), f| {). !'.. \). .'isd. 
(-/) (1878), 3 Q. t!. D. 173. 
(( ) ('asUUniii, V. I'rt'-toii, mijuu, at |i, lUl. 

{/; L--'d \fA?;?FiKf r-, in ("„:,'.•.•• •,, «,;./,,,.• (IT'^;, 1 Sni. L. C 
IJth cil. 1 at p. .")00. 
((/) .M;iriiii- iiifuraiicf. S .">:!.") ; .uid >( f 1!|..\< km i;.n, J . 111 loiiidti \. 
L\>nLr (\V.'\), 1>. It. !• ^i. li. 537. 





s M K \ ■.fl.. 

■ Hl\ ni.llrlMl lurl. l|i>U('\('l illll'H t'lltJv lllil'l'', Will iUOltl 

(ho |Mi!i('v <[uit<: .IS tiiiii'li ii.-« 111 t iist 's whnc >iicli iiiis- 
i<>|irtvM'iiliiliiiii ill ist's ti'oiii a uilliil inlriiiiuii to dcctMVf." 
\aU' iiisiiiaiu*' stiiiuls III! tilt" saint; inoiiii;^. In llni c asc 
n| Lotitloii .Issiiruiicc Co. V. Mtiiiscl (h), Jks.sku, M.K., 
,->anl : •' As i<vj,ar<ls tin- ui'ia-ral primijile, I am n«iL 
|»ro|)ait'U Ut hi\ (liiwn tiio law as tniiUin;; any (lilVen-iutj 
m substiiiH'c lM!t\v<'"ii onr cnnlracf ot assniancti nm\ 
anolln-i . \\ lirtliiT it is liic, oi- lim, ui inaiinc assiiianct', 
I lake it Liiidd lailh is i('i|iiiii'(l in all casi's, aiid tli(Ui;;li 
tliric may Im« ciMtain ciiciimslaiutis. Inmi (lie jtccnliar 
nai UK' I'l iiiariiif iiisutancf. wliicli r»'nnin' to !••• tlisclosi-d, 
ami wliiili ilu iiut ii)>})l\' ti' <il iicr colli lact- oi insurance, 
llial, is latliri'. in my dpiniou, an iilu^t ration ot the 
a|>|)licatinn <>i tiic pi iiuiplc. than a (lisUnction in 
|iiincij)lti."' it lias now ln'cn ,s"ttlcti thai this j)rinci]ilf 
applies 1(> all contracts til insniauce, t.^., a pidicy \vhit;ii 
I overs tiie risk <)l a debtor hecDniinji iiistdvent (i). 

A iion-tlisclosure aiisiny nt)t liuni any liaiid, n<>i 
Irtjin any ue^li^enee, but even Iroiu want of icutjwledge, 
may bo i;rt)und tor vitiating a pt)licy, il on the woiilin;^ 
t>l tlie aiiiecnient to insure, such appears to be the 
intentitm ot the parties ; e.g., when the actual trutli oi 
statements madt! is asserted in langna;;e aniouutinj^ to 
a warranty (k). 

Tiie i^ciicral remarks aljove apply to all species oi 
insurance. Jt is uow intended tt) ileal with matters 
[icculiar to I ill' more important tonus ol this contract. 

!. !!' 

s i;. >v c. o8t), o'.yi. 

:;; SluIvuX. //• -'A, [ i S^l^t j 1 ( >. 15. 7>^J . ! C-v, .;,(',-. J !,:j , iV;t-r-.l 

.'M ill'' fiiuts, fiiilj iHHii. Siiilvii \. Iliiiioiiid, [I'.IOO] A. (.'. \'.io ; 5 Ct»Ui. 
I'.i-^. Ills. 

^',) Thoin.-i<Mt V. 11 tc;«> (ISSl), !) Ajil). Ca». i>71. 

1,11 r. lN>rii\N«'i'. 


la IK. iNSI'RWrK.. 

Life iuHumnro is " a .oiitra.i ».v whi. U tli.- insm.T. in 
.•uiiHidoration nf :i . .Mtain |M.Miiinii>, .-itlK-r iu a i:ru>s 
.Mill, or Ijv annual pavni.-nts. un.U'itak.'s to |,av to tl..- 
(M'tsoh f..r whos.' iH'U.-tit til.' insuian.-.- i. nia.l.'. a 
..M-fain suni of nioiirv or anmiitv on tl,.' .l.-ath ..t tli.' 
person whose lif<* is insuiotl " (/)• 

To previMit .iarnhlinu in th.-s.> transa. tiun.s. tl..' \aW 
\ss„rano.! A.t. 1774, was passed. This enarts that - 
(1) no insuran.v shall I..- n.a.l.' l.v auv person or persons, 
lHMli.M politir ..r corporal.', on tl,.' lit.' or liv.'s o| al.v 
..Ih.-r person or p.'r.s..ns. wher.-in th- peism, .., p.'r>ons 
tor nl,..s.' nse. h.'ii.'lit. or ..n whose a.-c..nnt sn. h p..l,.M.'s 
shall ho Mia.le. shall hav no inf^est (whi.a .-M-ans 
p.M-nniarv int.'rest) (//O or hv way of ■.atnin- ..r wa.j.-r- 
i,,., : jrn'.l .'v.-rv in^nranc' nia.le .-..ntrarv lo the true 
intent an.l n,.-ani.,.: h-reof shall h" null an.l voi.l to all 
intent an.l purpo.'M"): CJ) 1 1,.' na.i,e .4 the p.'.son ^.. 
int.'rest.M, ..r l..r wh.-s.' l>en.-iit tin; poh.v is .na.h'. shall 
1... ins.'rt.'.l in th.' poliev (o) ; (:i) in all caM's wh.-re^th.' 
insnr.'.l has sn.h an int.'n^st. no '.ireat.'r snn. shall l- 
,.,.,.over.Ml than tl,.- vahw of the inter.'st at tin- .lat.' ol 
the poliev (i>). If. in th.> in.'antinH'. his int.'rest e.'as.-s. 
l„> niav v.'t r.MM.v.'r at tin- (loath, it h,.in' .'ss.'ntial that 
he sh.nild have his interest .mly at tl,.- date ..I tl,.' 
n.akin- ..f tl...'V (7). It shouhl further ho ohserv.l 
that an as<i.jn.'.' of a valid poliev n.'.'d not have an 
interest (/•). 

(/) Smith's M.ivMnlilr 1.MW ^Itli "1 )• I'- ^'•"' . ^ r " M 

10) Si"' i 1"" -■ , , I ' , .1. 1 1 , ■> 1 I 

') /).,% V. /-'/<.., '/,-. ro. ,is5.-.). 2 s,,.. 1.. « . mj.Ii e.t, -.11 
,', i./,M/ V. !-/,/w/(ls_''i), :!.si,„ II',. 



Hfltf s 




A |.nr,s..n wilt, his ofT.'ctcl ii policy (ui Uio lile <il 
;iiiMtli<«i' ill which h.- h;is no insiinihh! interest ranm.l 
lis ;i nil<' n>|)ii.liiif(' <hi' |...]icy ;ui.l i.'covcr tlio preiiiinnis 
|i!U(l (y) ; hill h<- (ii.'iy <h> so it h<! was indiin-d by the 
liiui.l u| lUi'. iiisuHMs In l»(^li(-v<' Ihiit ho wiis clVoctint: ;i 
valid Jiiid Icuiil puhVy. Localise in .sncli chsc I ho jmrlio.s 
.tro not, /■// /)firi (/rlirto (/). 

What is ;iii iiisiiiahh- iiifoivst ? It is diHicnlf fo 
• h^sciiho, hill the Inllnwin- illiistialioiis will show what 
has hccii t.ho opinion o| fho courts nndor tho oiiciini- 
staiioos Ih.Mvin oxislont. ,\ crodilor may insmo tho liio 
«'f to tho .■xtont of Jiis dold (//) ; a tmstoo 
may insniv in lospoct .,) tli<! intorost. <>i wliioli lio is a 
trustee (./) ; a wif<( mav iiisinc hor linsliiind (//) : a 
liusband mav insuro his v/ifo (2) ; and a man mav 
insure himself; hut a father has not neoossarily an 
insurable interest in the life of his son {n). 

Where a polioy has })oen effected on the life of a 
jHMson who subsequently becomes an alien enemy, tlie 
policy does not become void and the continued payment 
and ieceii)t of premiums does not involve unlawful 
intercourse with an alien enemv. but in tlie event of 
the death of tlie assured the rii^ht of his executors to 
demand payment of the policy moneys is suspended 
duriuir the war (h). 

By the Married Women's IVoperty Act. 1882. s. 11, it 
IS provided thiit a married woman may effect a policy 

l>) ll'ir-'r V. /',,/,•/ /,,/, .i.ssiirtlnr, („.. \\'M\\\ I K. J{. oli.'J. 

(I) //,/;//--.^■ V. l/ir, r/iool liilori'i, dr. Siiciil,/, (|<»l(n 2 K. |{ (S-> 

(ii) (hiHsiiH V. liobhro (ISttT). 2 Sni. 1,. ('. (I2lli prll 2:i:{ 

(.r) Tidssriil y. .ivLn-xliiu (I7<t2). Pcukc, I.TI. 

ill) li<cd\. liniial I-:,;-)!!,),!!, .{.tsiirovr, ('o.\\~,<x>).V>-i\k<' A<I.I •'-, To 
(;) (Iriffiths v. Fkminij, \VM\[\] ] K. J{. 80o. 

I'f) firilfnrd V. Ki/ ( Ml H. iV ( ". 724. 
'-) S.Ji>iiii,in V. /Jo'il, /i,,,„iini'- Cn.. |l!tl7J I Ch. .'".Hi. 

Ffre Insukanof. 


,1,,.,,, h,>r wNvn lilV. ..r upon tt.o life of l.or l.nshaua, tor 
I..M separate uso. Fill tli.T. it provides ll.ut if a man or 
a i.Kiiii.>.l w.niKii. .'flVrt u policy upon his or her own 
ln>. oi oil vM-h otl.n's liv.-s. nnd th.. policy is oxpressed 
to be for the hcuelit, of ilic (.thcr or for the l>cnclit o{ the this shall cioato a trust (c), which, so h.n- as 
Miiy object of tin- Inisi iciuains impcrforniod. shall not 
Inrni part of the insiinMrs estate, nor be Kubjf>ct to the 
iuMiredV' .h'bts. \M if it be pn-.ed that the policy was 
.db-ct.od, and the pren.i.nus i)ai<l to defraud the .reditors 
nf the insur.Ml. these will be entitled out of the moneys 
payaldc under ll,epoli(y,t.. a sum e^pud to the premiun.s 

AssKjnnirnt oj the /'o/tc//.-The Policies of Assurance 
Act, ISfiT, first conferred on an assi<inee the right to sue 
in his own nanu'. ; but (i) the assignee is liaWe to be 
defeated bv defences wlucli wo\dd have been good 
against the assignor (rf) ; (ii) he should give written 
notice to the insurance companv, for in the event of a 
second or further assignnuuit. the priorities will depend 
upon the date of this notice ; and further, any bona Hde 
paynuMit made by the company previous to such notice 
will be valid in favour of the company (e). Tlie com- 
panv must specify on the policy the place of business 
at which siuh notices u.ay be given, and upon receiving 
notice it tnust acknowledge the receipt of it in writing (/). 

FiRK Insurance. 
Fire insurance is a. <oiitract. one party to which imder- 
liikes to indemnify the other against the consequence 

i,\ if t!i(- trust fails, tlie tmm.v S«f; i"to tlif d.c.asrd's r^tat-- 
Itianr v. Miihm.l Hi-Hrv, fund LtJ> A,^.^nnntin„. il8i»2i I (^ b. H . )• 
' (,/) Sort .on 2. (0 S.e1ion :$. (/) S.-ctions -1. •.. 



f J 



"f a (iiv l.iipponiii, within ..,,,1 :,,L;ivn,| „,,„)i j.eii.Kl, in 

letuMi lor tlu' pitvMU'nl. of muwy in ;. hini|) .sinn uv 

1)V insfalnients. Tlio iasurod must liav.- an insural)lo 

intomst in tli.^ piemises insured, i.e., he nmst be in 

snrli a position that he incurs h)S3 by the burning ; 

thus, a creditor may insure a house over which lie has a 

inortga.i,^e (//) ; a waroliouseman may insure his customer's 
;'j:oods (h). 

A contract of fire insurance made by an a<rent without 
authoi-ity cannot be latified by the princij)al aftei- and 
with knowled.L.' of tlip h)ss by fire of the subject-mntt.-i' 
insured (/). 

The contract beinu one of indemnity, oidy the amount 
"f loss actually suffered ciui be recoveied : this 
I'.ovvRN, L..r., calls " th<' infallible ride " (/•). 

liy Ihe Fire Prevenli(m (Metropolis) Act. 177.1. s. 83, 
H' is piovidcd that any interested j)erson )nay procure 
tliat the insurance money shall be laid out in rebidldinu 
th.' j.remis.vs. but a clear and unand)i,i;uous request to 
tlie insurers to rebuild should 1m^ made. This risht is 
of -eneral and not merely (.f local application, and a 
jiid-nient creditor of the person insured who seeks to 
attach the insurance moneys cannot deprive a person 
interested of his ri^rbt to have the moneys expended in 
rebuildint,' (/). Instead of rebuilding the place them- 
selves, the insurer may permit the parties claiming the 

, '^).";f ;'"'"^';T ^''':'['II'" '■ '■'"^V^'"' I'rori.h,,! I.n;.ln,n,l 
(1888), 13 A pp. (Jas. ()!)'.». ' 

(h) U'akr.^ v. Muii/iirl, .\ss,i,ti„ci' Co. (185G), 5 K. & B 870 

{() Orovcr ami dronr v. Matthavs, fl'tlo] 2 K. B 401 Tlii.s rii Ic 

(l.M- notap|)lyl.Muiitiactsof inarim. iiisuramv. Stc W „ '{S-"* 

p . _i..2. .!(.3. « h.iv 11... Uoi^ of «!,.. nas,. are s.f out an.1 tli.' appliration 

(/) Sninolt V. Hoinhn. 11012] ? ('li. 4H. 



niuntn' to do ,so upon siitliciont sofuiily lioiuii; jiivon 
tliat tbe m(»n«'y sliall ho laid out in such rehnilding (w)- 

Assifjtiment of the Pnlic if. —Thi':^ is aUowed only with 
the ronseut of the offico (/;), and the benefit of the 
ijisnranre will not nm with the property, nor is the 
vendor even trustee foi' the puichaser of any money 
lerovered (o) ; as a faet he will have to return it to the 
company {p). 

Rights and Didies.—Theyo is. of course, the ordinary 
light to be })aid the value of the insurable interest on 
the burninii; of the property, an<l also the coirespondin<i; 
duty of paying the prenu'unis. The property nuist be 
accurately described in the policv. ajid any uialerial 
variati(m will be fatal ; c.7.. a polir v entered into l»y a 
person not a linen draper inchidiuv " linen, wearing 
a,pparel. and plate," wi. held to be exclusiv<' of anytliiug 
but household linen, and linen bought f(U' sale purposes 
was therefore not witliin it (7). It is frequently agreed 
tliat notice of loss shall Ix; giv<Mi within a certain time 
to the rouipany or its agents, and that tliis shall be 
accompanied with ])articnlars ; and it may be made a 
conditifm ))r(>cedent to recovering (r). 


The insurer is entitled to every right of the assured, 
or, as Brktt. L.J.. says : " As between the under- 

(/») Si'e l|V.s7/»,■((^■^ »■ /•'//■' Offii-i, V. (lii.-.jdH- I'rori(li)it liir,-t:: I 

(n.) Sadlets' Co. v. Bedrork. 1 Atk. ."..'.4 (tl.oid.'d in IT.'M). 

'o) n.iiDirr V. Fo.^li»i.{\SA\), ISCIi. I). 1. 

(p) Sec an'p. |i|i. .".(S2. :i(i''.. 

((/) Walrhoni. v. Ltni'jfurd (ISl.J), ."! ('alii|i. 4*J2. 

(r) M lo,, V. //.»)/•"// (I S,j:{). H Kxoli. hhl. 






wrilt'i' (s) ;iii(l tlio assiii»Hl. tlio imdiMwiiloi is cntitlt'd to 
tilt' iuhiintii'ic of ovcrv rit'lit of tlic iissdn-il. wlietlior 
such li-lit consist, ill coMtract. fiillillfd or nnfulfillcd 
or ill iiMiioiK loi loit. i-iijialdo of liciii'j; itisisti-d (»u or 
jilroadv iiisistfil on. or in any otlicr ri^lif. wlu'ilior by 
wiiy of cniidition or olliorwisf. If;.fal or »M|iiitaliI(', wliicli 
can be, or lias 1»f>on. exercised or liasaccniofl, ami wlietlior 
siicli li^lit. coniil or could imt be cnforci'il liy the insurer 
in the name of the assured bv the exercise or ac(|iiirinu; 
of which ri'dil or idiidition the htss avainst. which the 
assured is insured can be. ui- has lieeii, diiiiinished '' (t). 
This is (idhMJ the tlnclrinr of mihroi/dtinn. It entitlas 
the insurer who pays the insured not only to the value 
of any benefit received b\- the latter by way of coni- 
])ensation for actual loss, but also to the value of any 
rights or remedies tlu^ insured may have aj;aiiist third, 
parties in resjit'ct of the damage; if, therefore, the 
insured renounees siu li li-hts. to which the insurer 
would be Kubrotjfated. he is Ixuind to nial:»i u[) the 
amount to the insurer (u). Hut. on the other hand, 
this doctrine allows an insurance company to enforce 
onlv those rights which the assured himself could liav(! 
enforced, and therefore, when a wif(^ f(^loniously burnt 
her husband's property, and the company brou,i,dit 
an action against the man and his wife for her misdeed, 
the action was dismissed, as the husband could not, as 
the law then stood, biinu an action against her (r). 

(v) Tlio contract in lliis |i,uti( ciisc was a lire jmiicy : Imt 
( liO'igli tin' term \iiiiIi'i\vritiT is iiiero usual iu conn'-il ioi\ wild uiaiiuc 
iusuranc'i', its us'- is not eonljncil to tliat fdiin of insuranrc 

(0 CnMilhiiv v. l',:.'<lov {IS.S.'l), 11 l^. H. I)., p. :iSS. 

(«) H"' ••/ f)/" I'.iyjlinid Firf I iistiruiiri Cn. v. Isimr-.-, [ISltTj 1 Q. 1!. 


(r) Mi'lhnHl /„.»/■-;-... r„. v. S,„itl, (ISSI). U (). M. 1). .".til. 

{ -71 ) 

MA I! INK lNSlIliAN('K(«). 

Tmc law reliUiii'i Id marino iiisiiiiiiuo, has l)Oon coilitied 
1)V tlie MmiiK^ I iis;i I anro Act, llKtO. It has thoietort^ 
Innumio umioco.'^sarv t* cite many of thn oldor cases as 
iuithoritios for the. iMopositions of law whirli are laid 
down ; l)iit some liavo hocn rcitainoid for purposes of 
ilhistiatioii wImmo the scopo and ineanini; of a section 
is not at first si^ld apparent. 

AFariiii' insuraiico is a contract of indemnity against 
h)sses incident to marine adventure accruing to the 
ship, carifo, frci<;ht. or otlier subject-matter of a policy 
during a given voyage or voyages, or during a given 
length of time (h). The person who is indemnified 
is called the " assured,"' or tlie " insured," the other 
partv being styled the "' insurer " or the " underwriter." 
The policy may be so extended as to protect the assureci 
against losses on inland waters or on any land risk which 
mav be incidental to a sea voyage (c). The contract is 
generally entered into through the agency of brokers, 
who are responsible to the underwriters for the pre- 
mium {d), and the mode of contracting and the various 
details are much regulated by the custom of the different 
associations whose members are engaged in this particular 
kind of transaction. 

All persons who have insurable interests may be 

(a) IJifortTocs to si rtions iirf in those of fhf Maiirif Insiiranrc Act. 
{ft) St-'ction 1. 
(f) Section L' (I). ((/) Sec mitc, p. I5«i. 





• i< 

Marink Insukanok. 

insured, imlfss lln'v me jilien ciii'inics (r), and an\ 
('oiiij)iinios I.I ]itMsuns Hot, iindi'i disaltilitv iiiav lie 

Ainonust siibjtxt-inatter.s of iiiariuo insurance tnav 
l»t^ named the sliip, the ^oods ((mnerted therewith, the 
I iiiuo. treiiiht. incmey lent im Ix.ttoimv, etc. ; but as in 
other ttiutracts, ho in marine in>surance, there can lie 
ii>. valid agreement with re^iaul to ille'jal tradinf;. 


When a |)ers(»n has insured his interest in any vessel. 
car'j;n. or freight, he mav assign his ixtlicy <o another, 
unless llie leiins of the ))olicv forbid it, and that other 
ina,y sue iu his own name, but is liable to be m(^t by 
the s;inie (h'feiu'es as would have been valid auainst Ihe 
ori'jinal assuicd ; r.//., that the policy is V(»id through the 
non-disclosure of material facts by the assiiinor (/). 
The policy mav be ;issi'4ned e-ther befor*^ or after loss {g). 
All assuHMl who has no interest cannot assiiin ; but 
thi.s rule does not affect the assi<^'nment of a policy after 
loss (//). An assi<fntnent can ])e inaile; by indorsement, 
or (if the policy be indorsed in bhud<) bv delivery (i/). 

Tnstirable Intkrest. 

A person has an insurable interest when he is 
interested in a marine adventure, and in particidnr 
where he stands in anv IcLial oi' etpiitable relation 

(. ) lir^iwloii V. Sxhill (17'»4). »; 'I', i:. 2;!. 

( /■) ir. Pleki-r<>lill .!• Siiii^ w [.{iniliin uml I'nn imiid. dr. Iti\iiiiniir 
'■.'.. I l'.tl2j;$ K. IV (ill 
(,/) Sent ion 50 
(/(I S. I't ion .".I 

In.>1'|;AUI.K iMIillKM 


to Ui<! iulv(!nliiro t»i' to Hiiy insuiablo i)n»|)cily (/) at 
risk Llioiciii, in c(mse(juciico ol wliicli lio may bcnelit 
l>y tlio siiliity or duo ariivtil ot iuriurabhi property, 
or may bo projudicoil by its loss, damage, or dotentiou, 
or may incur liability in rospoot thereof {k). There 
is a marine adveuture where insurable property {i) is 
oxposeil to maritime perils, or where the earning of 
height, etc., or the security for advances is enilangercd 
l)y tho exposure of insurable property to maritime 
[)orils, or where any liability is incurred, by a person 
interested in or responsible for insurable property, 
l)y reason of maritime perils (/). Such interest nmst 
exist at tho tiine of tho loss, but may accrue during the 
pendency of the policy, and if tho goods are insured, 
" lost or not lost," such interest in them may bo acquired 
after loss has actually occurred, unless at the time of 
oHoctiug the insurance, the assured was aware of the 
loss and the insuriu- was not (in). Defeasible and 
contingent interests aie ins\uable, and so is a partial 
interest of any nature (/t). 

Tho following arc examples of persons having an 
insurable interest : 

(a) Shipowners and owners of goods--to the extent 

of the value of their interest (o). 

(b) A mortgage — to the extent of the sum due to 

him {j}). 

(c) Amortgagor — to the full value of the property {p). 

(d) An insurer — who uia}' reinsure to the (extent 

of his liability [q). 

(i) Sliiji, jiiioils or olhiT iii<i\,iIjU> (>. ;; (2) (a)), 
^.v) Si'ctiou ,">. 

(0 Sootiou ;( (2). (o) .Siotiuu I » [-.',). 

(Ill) .Section i>. (/») Section 11 (1). 

{n) fcjcctiou.-i 7, b. (7) {Sccliou 'J. 






Maiu.nk kani'l;. 

{<•) A iMittoimv liniidholdor -to I lie t-xUuit; u| (lie, 

;imoiiiit payable t(i hiru inidtu- tlie Ixuul (r). 
(i) A p'Msoii who haa advauced money lor tlio sliijiH 

necessaries (*■). 
(•i) A persuu advaiuiuj^ freight it such freij^ht 

is not repayable iu case oi loss (/). 
(h) The master and crew may insure their \va«fes (u). 
Au assiiiiimcnt of the interest nf the assured in 
(he subject-matter insured, does not. in the absence 
ol ex[)ress or im[>lied rtyreemcnt, transfer tlie nights ol 
(lie assured undei the policy (j). 


Wli'Tc the iissureil has no insuralilf inlcicq ami 
no expectation ol acquirinij, sut h iiii interest at (ho 
limeol the contract, the policy is void. So are |ioli<ics 
made " interest or no interest, "" or "• without lurther 
prool ol interest than the policy itself,'" or policies 
made " without benefit of salvage to the insurer,"' 
except iu cases where there is no pos.sibility of 
salvage (//). 

(Tamblini; on h)ss by maritime perils is now an 
otl'ence )»unishable by line or impris(mmeiit. The 
prohibition extends to (i) contracts tnade bv a person 
without luiving anv bonil tide intt'-rest in the siile airiv;d 
of the slii|» or tiu^ safety of (he subject-matter insured, 
or a bona tide expe<'tation of ac(piiring such an interest, 
and (ii) to contracts matle by any [)erson in the emjilov- 
mc.nt of tlie sliii)owuer (not being a part owiici) where 

(,) Si'i'iioii m. 

1^) Moniib <C <'u. \. I'l' lUi, [l'.Hi,".| 2 K. I!, .'lij^i. 
{!) Sietioti 12. (.1) SccUoii I.'. 

(//) .Srctioii 11. (y) .Section 1. 

Dim l.nsrui; am- UcrKKMMAlin.Ss. 


(h.- fuiitiucl is iiiadt! " inton-st itr no iiitfirsl,"' <>r 
" wiilimit tV.itluT pi()K>f of iiitt'.rest than the polirv 
itself," or "' without benclit <•!' salvage to the insurer."' 
or s»ibj(^ct to :my like term. Any hioker throui;h 
whom iiinl iiiiy insurer with whom such a contruet 
has been ejected is alstt guilty of an olTencc if he 
ktiew the nature of the contract (z). 


A contract of marine insurance requires the utmost 
ucukI faitii. and if that be not observed by either party, 
liie other party may avoid the contract (a), 

ll is the duty of the person intending to in.^iie to 
communicate to the insurer every circumstance known 
lo iiim or which in the ordinary course of business lie 
oii-!il to know, which is material to the risk, that 
is, every circumstance which would influence the judg- 
ment of a prudent insurer in fixing the premium, or 
ileterminiug whether he will take the risk (6). Tin; 
obligation to disclose extends to communications made 
to, or information received by tlie assured (h). Thus 
he slb)uld communicate news tending to show that 
a vessel is overdue, that it is damaged, or tliat it is 
lost ((;)• But there is no neeil to connuuuieate know- 
ledge wliicl). the underwriters are likely to know, such 
as general liad-i customs, speculations as to war, 
tempest, etc., nor need the intending assured 
ids opinion on matters relating to the adventure ((/). 

(:) M;iiiri'' ln>uraiic( (( i.iiiililiim I'liUcks) .Ui, I'JOH. 
la) Sittioii 17. .,,,•• 

[Ij) S-etiou li> ; !!k! -■'' A'i-^oriatal OK Cnrrier.i LIU. v. L iit'Jii 
In.unnirc Socldi/, [lOHJ 2 K. B. 184. 

(,) cUulAont V. Kiwi ( isi;{). 1 >r. -fc «• :«•"'■ ^'•'- •ll'-"' ■^- !**• 

(-0 '''>iin- V. l!'''l'i't MTf..-,), 1 Sill. L. C. ■.llitlicd.) oob. 

H < 


«'''» Makim; In.suii\ni!i;. 

A iiniicipal IS tl(:ciiii;tl al.-so u> kjiovv. ami lu Uv bouml 
l*y iJic JitJii-titiaiuuuicatioii ui, cin uiiistuuces witliiii 
the kuuwlcd^u, ur wliicii lu tho oiduiaiy touisc ol 
Imsincss ()u;^lit to bo withiu tlio kuuwlcdj^o oi his 
iij^cnt (e). •• It is a coiiditiou ol the cuntiutt that 
ihurc is nt) inisrepioseutatiou or cuuccahneiit, cither 
!)>■ liio assured or by auy ouo wJio oiiglit as a matter 
oi business and iair dealing to iiave staled or disclosed 
the iacts to hiiu, or to tho underwriter lor hini " (J). 
iiut this must not be carried too iar. Lord Watson 
says ((/) : '• Tho responsibili ol an innocent lusureil 
lor the non-communicaliun ol iacts wiiich happen to 
bo within the private kuowletlye of persons whom he 
merely employs to «)btaiu an insurance upon a particular 
risk, ought not to be carried bey(md tho person who 
actually makes the contract on ins behali." 

Similarly, every material representation made bv 
tho assured or his agent during the negotiations lor, 
and before the conclusion of, the contract must bo 
true, or tho assured may avoid the policy. A repre- 
sentation may bo of fact, of expectation, or of behof. 
It k sufiicieut if a representation of fact be substantially 
correct, antl if a representation of expectation or belief 
bo made in good iaith {h). 


Tho contract is not valid unless expressed in a policy 
of sea insurance (/). it must further specify ; (i) The 

(L) tJfcHOU I'J. 

(J) LiM)Li,v, i..d., Ill ULickbiini \. 1 ,//w,> (16^0), 17 V. JJ. 1). 07S. 
(;/; Ibid., il Ai){i. Cis. o6i, u lnic tli<> i.oint Wiio lulK (jou.-jiUriI ; 
.mil sri' lUitcLl,::,:^ V, ll'!4"Hi vlSbN), 21 '' I B. i>. iii. 

\^lt) St'Ltiua 20. 

^,) Stiimi. Act, 1S;»1, ... ;ij (1). And ;..c <;uilo,6U^rtnUi AlUi^.d- 
Aabd V. Da Cv^la, 1.1'JllJ 1 K. U. 13/. 

Till: Si.ii- 


MiifiK' nf tlic »fwur«5(l, or «»f Homr person wlm otlrctM tlic 
|M)lii;v on liis behalf , (2) tlie subject-matter insured 
iuul the risk insured aijainst ; (3) the voyage, or periotl 
of time, or both, as tlie euse may be, covered by the 
insurance ; (4) the sum or sums insured ; and (5) the 
name or names of the insurers {k). In the case of 
a Ho.itin^ policy (l) tlie name of the whip may be 
comnumicated afterwards when carj^o is insured, and 
the vessel in whicli it is to yo is at the time <>f insurin;^ 
not fixed upon. In such cases the insured should 
d(M'laro the shipment and the value of it as soon as 
li(5 knows of it, and the policy attaches to the j^oods in 
the order in which they arc shipped (m). Unless 
otherwise a-^roed, where a declaration of value is n<»t 
made until after notice of loss or arrival the jjolicy 
must be treated as unvalued (k). The policy must bo 
.si;;neAl i)v or on behalf of the insurer, and where a 
corporation insures it need not bo under seal (*(). 

The Sup. 

It is customary to draw up a memorandum of the 
terms, which is initialled l)y the imderwriters before the 
execution of the formal policy, and the general j)r{R-tice 
<»f the comtnercial community is to recognise this 
memorandum (called The Slip) as though it were the 
contract ; but at law nothing « an be sued upon but 
the stamped policy, and the slip can be looked at by the 
court for collateral i)uri)oses only (c.y., to \ie 

(/.) St ction 2."{. 

{I) I.e., A iiolicy whicli di>eiib< > (In ni,suram<' lu g« iiiin' > (i 
liaviH Ui! n:imo isf tlu' .ship to bt' d'-iincd by K«l>K«>qiic iil it< .it)' 
Soc also H8. 26, 2<.t. 

(Ill) Section 2',). 

(,/() iiH'elion 21. 




Makivi; Insi kanck, 



(latif wluMi tilt' risk win uiHlt-rtnkfii In)) tmv (I(h!h flit* 
inifiulliti'i <>f tli« slip riciit*' a rnntnift tr» «ntor into a 
|M)licy (;>). So u <lu(Mini<'iif < nllnl iiii " upon cuvit." 
by which iiiul('rwiit>Ms a'.'i»'f(| tn reinsure to t\m 
t'Xtent of t'xcesHas over ceitain anion nts. risks taken liv 
the original insuicis. was Ik-M invalid both as a poli( \' 
aiul as a <(m<ra«;t to issm- a poli( \ , bfcanse it rlid not 
specify the " snin insured " (71. 

Kinds ok Marink I'olumks. 

Ainonv; the most important divisions i> that into 
nducd and unmlncd policit;-. In a vahied policv ili- 
iunoiint is lixed by an reement and states 1 in (nc puhcv (/i 
An iiniithird policy is oru^ which docs not stale th<- 
value of the subject-matter of the insurance ; Ik^ui c 
.liter a loss, the amount to be paid by the underwritci 
i(Muains a matter of assessment, subject to tiie limit ol 
tin! sum insured (s). 

Policies may also be divided into vnyiujf^ tone, and 
mixed. A voya;j;e policy is one which covcis tlie 
subject-matter " at and from " or frojn one place to 
another or others. A time policv covers it during 
a specified period, which must not exceed one year {t) ; 
but such a policy may t-ontaiu a " c(tntinuat ion clause " 
to the effect that in the event of the ship beiu^ at sea, 
or in the event of the uon-ctimpletion of the voyajic at 
the expiration of the policy, the sidiject-matter <»f 

(o) Sect ions 21, Sit. 

(/)) Fixher v. Liirrimiil Muiim lii.siinuiid Co. (1874), L. It. !t (). H. 
41rt. This will not a)>|)lv t" Iht' ruse of a fire pi)li('V {'/'liomjison \. 
.If/'(W((1SH0). 2.', (,>. ){. iV ;;til). 

i.^i) UnniP Mnriiir I ayiirtm-f Cu. v. StrHh. [IS'.l.Sj 2 U B, ;{5| ; 
;} Colli. Cm. 172. 

(r) S(>uljon 27. Sn y»,-/. p. :{h5. 

(*) Section 28. (/) Section 25. 

Li,oYi» s S, (i. I'ui.K \ 


iiisuiuiKO nliall he lit'ld lovncd until the sliip'-H arrivul, 
Ml f«»r iu)i timii! tliiui tliirty «liiyH theieaftcr. II tli(! 
Msk ( ' v»'H'<i l)v tho ( (Mitinuttiiou «-liiiist' uttiuluM, ♦•ithoi 
,1 new |)oln\ iiiiiHt, l)«! i.sHiicd m tli« ••xi.stiiiv |Milicv must 
!»(• sLaiup<'<l in it-spect of the (..utr:ut ciciitrd l»v the 
1 iun clausi' (//). A polii y u\ insurunc*- (niul« to 
(■nv(M a slii|» uii.lti (■iinstru(tii>n oi repair tu on trial, 
may 1)0 stanijM'd as a voyat'e policy, althouuli made for 
a tinif cxceiMlin;!; twelve nionth.s {r) A tinn! polity 
m wliii h the voyaj^e also i.s specififd, is stxled a mixed 
polity, r.ii.. A. to X. for six months (j) 

Form ok iNlAiiiNK Policy. 

riic I'oliry may he in print or writinu. oi parlU 
wriKeii and partly printed. The form .set out l»e|o\v is 
known a.s Uoyd's 8. G. policy, and is the form of policy 
.scheduled to the Marine Insurance Act, I9(iG. The 
notes which follow will, it is hoped, ehuidate it. 

S. (J. 

£— - 

Bk it li^uv^^ uhat -1. atid ur «* Aijinl us well in ht^s 
own name ad for and in the nuuu and nanun of all and 
evtrv other person or persons to whom tlif name doth, 
may, or shall ai'iiertain, in i)art oi in all doth make as- 
Muraiue and eaut*e hwmtlj and them, and every of them, 
to he insured (a), lost or not IomI (b) at and from (e) Lundtm. 
l'{)on any kind of goods tnid nierehandises, and also upon 
tlie body, taekel, aj)paiel, ordnanec, munition, artillery, 
boat, and other furniture, of and ni the good ship or vessel 
called the Mary, whereof is master under (iod, for this 

i^u) ^iiaU4:Aet. 181>l,s. ya, asHi!ifn(!''n.y -.. 11 :.!!!:,■ Imsimuk Act. 

((,) Uovinue Act, 190:{, 8. 8. 
(r) Section 25. 

I ;! '■' 


i ■ 




'^^^* Mauink Insukanhk. 

|)ic.seiit voyage, John Smith, or wLusoevir ol«o shall yo 
loi- master in the said sliii), or by whatsoever other name 
or names the said ship, or the master thereof, is or shall 
be named or called ; beginning the adventure upon the 
said goods and morchandisos from the loaduig thereof aboard 
Ihe said ship (c) upon the said ship, etc. 

and so shall continue and endure, during her abode there, 
upon the said ship, etc. ; and further, until the said shi].,' 
«ith all her ordjiance tackle, apparel, etc., and goods 
and merchandises whatsoever shall be arrived at Melbourne 
upon the said ship, etc., until .siic hath moored at anchor 
ivvcnty.four hours in good safety (d) ; and upon the goods 
and merchaiidises, until the same he (here discharged and 
safely landed (e). And it shall be lawful for tie said 
•-^hij), etc., in this voyage, to jiroceed and sail to and touch 
and stay (f) at any ports or places whatsoever on the Went 
( '0,1.4 nf Africa without prejudice to this insurance. Tiie 
NHid shij), etc., goods and merchandises, etc., for so much 
a-s concerns the assured, by agreement between the assured 
and assurers iji this policy, are and shall be valued at (g). 

Touching the adventures and perils which we, the 
assurers, are contented to bear and do take upon us in 
this voyage : they are of the seas (h), men of war, fire (i), 
cne/nies, pirates (j), rovers, thieves (k), jratisons (I), letters 
of mart and countermart, surprisals, takings at sea, arrests, 
restraints, and dctainmenta of all kings, princes, and 
people (m), of what nation, londition, or quality soevei-, 
barratry (n) of the master and mariners, and of all other 
perils (o), losses, and misfortunes, that have 01 shall come 
to the hurt, detriment, or damage of the said goods ajid 
merchandises and ship, etc., or any part tlu icof ; And in 
case of any loss or misfortune it shall be lawful to the 
assured, their factors, servants and assigns, to sue, labour, 
and travel for, in and about the defence, safeguards, and 
recovery of the said goods and merchandises, and ship, et<-., 
01 any part thereof, without prejudice to this insurance; 
to the ehaiges whcieof we, the assurers, will contribute 
each one aceonliiig to the rate and (piaiitity of his sum 
herein assured (p). An«l it is expressly declaied and agreed 
thai no acts of the insuitr <!r iiiHi„c«l m lecoveriiig, saving 
ur presoiviug the inopcMy uisurcd, shall be considered aa 

I^i.oyd's S. (i. Por.if'Y. 


a waivfr, or ncffptance of abandonment (p). And it is 
agreed by us, thf insurers, that this writing or policy of 
assurance shall be of as much force and effect as the surest 
writing or policy of assvirance heretofore made in Lombard 
Street, or in the Royal Exchange, or elsewhere in London. 
And so we, the assurers, are contented, and do hereby 
promise and bind ourselves, each one for his own part, 
our heirs, executors, and goods to the assured, their 
executors, ailmiuistrators, and assigns, for the true per- 
formance of tiie premises (q), confessing o\irselves paid 
the consideration (r) due luito us for this assurance by the 
assured, at and after the rate of 

In witnkss whereof we, the assurers, have subscribed 
our names and smns assurctl iti Lnnilnii. 

WB.- Corn, (isli, salt, fruit, (lour, and seed are warranted 
free from average, luiless general, or the ship be stranded ; 
sugar, tobacco, hemp, flax, hides, and skins are warranted 
free from average under live |)ound8 per cent. ; and all 
oilier goods, alsi ';c shij) and freight, are warranted free 
fr'oni average, unt.<-i three pounds per cent., unless general, 
or the ship be stranded (s). 

Nitfrs on the abuve Form of Policy. 

(a) " A/i irell in his own name," etc. — Tho words (»f 
till! p()li(;y arci .siitficiont. to protect all p«Tson.s who 
possessed an insurable interest at the time of the 
insurance or acquired one durinu; the risk ; and under 
them a person interested, who did not authorise an 
insurance to be effected for him, may subsequently, 
even after the loss, adopt and claim the benefit of the 
insurance (y). 

But it is not enough that the person claiming the 
benefit of the policy should be within the description of 

(;/) St'ction 8<». 


N : 

I i 

\ mv 

tm !.■'!■ 



thoso insured, if tlic |)Ois()ii olTtu^iiii^ the policy did not. 
ill fiict intend to insnre on liis belialt (2). 

(I)) ■' Lost or iiof lost." The words cover the assured, 
.dthoiinh tlie sid»jc( t-iimtlcr of th<! insuniiut^ has l)een 
liart.ially or entirely lost, at. thc^ c(»ncliision of tli: 
I outract. of insnranc f. These, words incorporate au 
exception lo the ruh; that the iissured must have an 
insurable, interest hel'oie tin' luss. an exception recoti- 
niseil at law. 'I'hey also entitle th(^ underwriter to 
his preniiuni. whether the suhjcut-iUiil t(M- has actually 
arrived or not {(i). Mul il, when the contract is 
nutde, the assured is awari^ ol tin* loss and the insurer 
is not, the policy is of no avail (h). neither can the 
underwiiter n^tain the pretiiiutn if he knows of the 
(^onelusioM of t!ie risk (i(). 

(c) ■■ Al and friiin." " l{(yinniiii/ llir ndcenlnrc on 
the siiiil ffooilx," ctr. 'i'lu^e are the woids which deter- 
mine the time from which the insurer is on the risk. 
If the ship is insured " from '' a place, the insurer's 
'isk dates from the time, when she starts on the voya<j,e 
insured (r) ; if a\w is insured " at and from/' the risk 
dates from the time wluwi tlm contract is concluded, if 
at that titne she is in safety at tlnit place ; otherwise, 
the risk commences from the tiine .she arrives in 
liood safety at tliat place ((/). If freiuht is insured the 
risk, under the wonls " at and from." attaches imme- 
diately the, shij) is in i^ood .safety at that place, if the 
liei^ht. is chart ere.d freight. otherwise it usually attach<\s 

(:) JJ'imIoii Friiil r„. v. Itnli-I' n ml Miiiiiu I n-iiniiiCi Co., [IltOtil 

\. c. xw. 

(.() Sixtu.ti 84 (;n (i.). (<■) !Sili((liil( 1.. r. L'. 

{!,) Srlndul,. J., r. I. (,/) ,<,I,r,|iilc I., r. :\ (ii). (It). 

WlH'' I 

IjI.OYd's 8. (J. l'oi,U!Y. 


pro rata as tlie cargo is htadod (e). Wliotlior tlift ship 
is insured " at " or " at and l'n»n» "" it is an implied 
I iiridition tliat sho shall coiniiKMue tlio vcntuje within 
;i roasoMiil*!*' limn iinK'ss tli« dcliiy was causod by 
(^irrmiislajiccs Known to flui insiiriM- Ih'I'oio tlm con- 
( hision of the tontiiirt.. or (he insurer has waived th« 
( oriditiou {/). II' ,1 plivce of departure is mentioned, no 
lisk will attach t«» the underwriter it" the sliijt does not 
sail from that place (*/). The insurer's risk on goods 
insured '" Irom the loa<litig thereof " does not attach 
until tliev arc on hoai'd. the risk during transit from 
shore to the ship is on their owner (//). To meet 
this and th<^ ease of loss whilst unloading, a clause is 
often put in the margin of the policy to the following 
effect : '" ittchi<ii)Kj «U n's/,- nf craft to otid from the 

(d) ami (e) "' Until s/w lialh inonrrd." etc. " Until the 
<fitnc be th're disrhttrijcd," lir. I'liesc^ words aic intended 
to fix th<' date i»f th<; cessation of the insuiers risk. 
Where the risk on goods continues until thev are 
" safely landed," they must he landed in the customary 
manner and within a reasonable time after arrival at 
the port of discharge, and it they are not so landed the 
risk ceases (i). So, if it is customary at the port to 
land the goods by means of lightcrrs. the lisk continues 
until the goods are safely landed aftiM- transj)ort in the 
liuhters (l>). 

(f) " To firtxnd and sail to ami touch and ntuy.' 
etc. -It is the duty of the assured not to deviate, that 

(.) S.-lRilulc 1., r. :{ (i). (<l). 

!/) Scetion 42. ik) .Sch.-ilul.' I., r. 4. 

(f/) Sccliim 43. (i) ychtdulc J., r. ;">. 

(/■) lliirry v. Royul K.nh,,,,'/! i <j. (Isot), 2 li<>.s. A- I'. 4:{(l. 


1 * 


-- r> 


M \KiNr fNsui!\Nrr. 

is to sav, not \o ti.t out of tlio proppr course, as nureed 
or as proscribed by ciLNtom. between tlip termini of the 
voyaire. Deviation, without lawful excuse, entitles the 
underwriter to avoid the pr>licy, even though the ship 
has regained her course before any loss occurs, and the 
risk was not increased by such deviation (I). Deviation 
is excused if speciallv authorised by the policy, or if 
caused '•^\■ circumstances Itoyrmd the control of the 
master or his employer, or if reasonably necessary to 
comply with a warranty ; or to ensure the safety of the 
ship, or to sav.! hum;iii lif(! ; or to obtain medical or 
surgical ail! for auv peisoii on boanl. (»r if caused by 
barratrous conduci of master or crew, if barratry be a 
peril insured against h') ; })ut a (hn'iation for the mere 
purpose of saving properly is not justifiable (n). The 
words quoted at the head of this note authorise the 
subject of insurance to ptoceed to and stay at certain 
ports mentioned in the poli(;y, but not even to stay at 
such ports may the ship deviate from the voyage ; she 
may touch and stay at them in the course of the 
from the port of departur.^ to the port of destination (o). 
Libc^rtv given to a ship insured on a voyage from 
London to Plymouth to touch at any port in the 
l<:nulisli Channel will not excuse a call at Penzance, 
this last-nam<'d poi t being beyond the voyage in question, 
but it would allow a call at Newhaven in Sussex. If 
after the commencement of the risk the destination 
of the ship is voluntarily changed from that contem- 
plated by the policy, this is a change of voyage, and 
ri.)t a mere deviation, and is not authorised by the 

d) Section 40. 

(m) Section 4it. .. „ - 

(n) Scaram(i»jn v. .Sr,,,,,,) (1880). .'". C V. H. 2<.»:>. 
(o) Schednli 1., r. ti. 

Lloyds S. d. Policy, 


(litu-se now being considered (p). Where the destina- 
tion is specified and the ship sails for a different 
liestination, the risk dues not attach (7). Further, if 
Ml insurance is etfected for a particular voyago and 
there is a change of voyage, the insurer is discharged 
h'oni the time when the detern\iaation to change is 
manifested, even though the ship be lost before she has 
actually changed the course of the voyage for which 
the insurance was effected (r) ; but a mere intention 
to deviate which is not carried into effect will not avoid 
the policy (s). Any hardship which cargo owners or 
others may suffer by this state of the law can be, antl 
often is, met by a special clause inserted with the ussent 
of all parties affected. 

The voyage must be prosecuted with reasonable 
diligence, and unjustifiable delay will discharge the 
insurer (0- The reason is that " the voyage commenced 
after an unreasonable interval of time, would have 
become a voyage at a different period of the year, at a 
more advanced age of the ship, and, in short, a different 
voyage than if it had been prosecuted with proper and 
ordinary diligence ; that is, the risk would have been 
altered from that which was intended " (w). Circum- 
stances which excuse deviation will alsu excuse delay (u). 

(g) "Shall be valued at," e<c.— The value of the 
subject-matter as stated is accepted for the purposes 
of assessing compensation when a loss has happened 
as the tnie value, and is conclusive between the 

{2>) Section 45 (1). 

(7) Section 44. {■■<) S*>ction 4(i (3). 

(r) Section 15 (2). (0 SvOtion 4^^. 

(it) Mount V. Larkin* (IH32), S Bing. 122, iKr Tindal, (. J. 

(.1) Section 4'J. See utUc. pp. 383, 384. 

M.L. O 


Marine Insurance. 


i I 


insurers and the assured except for the purpose ot 
determining wliother there has been a constructive 
total loss (//) ; unless there is evidence that tlie amount 
tixod was traudulently stated, or intentled by both 
[)artics as a mere waiter. " An exorbitant vaUiation 
mav be evidence of fraud, but when ttie valuation is 
bttna lide, tlie valuation aureod upon is bindiuij; '' (z). 
The elfect of a vaUied policy may be illustrated by the 
case of Balmoral Cum]>itni/ (6'..S.) v. Marten (a). The 
defendant in that case insured a ship valued in the 
policy at £33,000. The ship incurred salvage exi)enses 
and a nenoral average loss. In the salvage action the 
real value of the ship was proved to be £40,000, and 
in the average statement the riirhts of the parties were 
adjusted upon the footing that £40.000 was the con- 
tributory value of the ship. The insurers were held 
lial)le to make 'j,()od to the owners only 33-40th8 
of the salvage and ueneral avera<;e losses ; that is, to 
pav in the proportion of the insured value to the con- 
tributory or salvai^'c vahie 

(h) ■■ Perils . . . of the aeas." — The cla\ in which 
tliese words occur defines the various danj^ers a<:ainst 
loss in connection with which the insurers a^ree to 
imlemnify the assured. The term " perils of the 
seas "' refers only to fortuitous accidents or casualties 
of tlie seas, and iloes ntjt include the ordinary action 
of the winds and waves (6). The indemnity is against 

(>/) Srct imi li". 

iz) Hovii.i., ( .1., in ]!arl(r v. Juv.-oii (IStiS), L. li. .i C. P. 306. 
S.C iilM) Th, Main. !1M14| 1'. 320. 

(./) 11!;02] A. V. :,\l : 7 Com. (as. 2!*2. 

(6) hch( diile T.. r. ,. I'ndcr |ic rii.-- of tiw sens arc ronijinluncJi d 
wiiuls, wavi .'*. liL'htiiniir. lucks, shoals, cdllisioiis. luid in pcncral all 
causes of loss and ilani.iur to tho piojn it}- iusun d, arisinp from the 

Lloyd's S. G. Policy. 


aceiclontd which may happen, not a'^ainst events 
wliii'h must happen ; nor need the h.s.s he occasiimed 
liv extraordinary vii)lence of the wind.s or wavoa. If a 
^'l strikes upon a sunken rock in fair weather and 
^uiks, this is a loss by perils of the sea. And a loss by 
i.Hinderin'^, owin<i to a vessel coming into collision with 
.uiuther vessel, even when the collision res\ilts from 
rlui ne^liuence of that other vessel, falls within the 
^.iine cate'jory (c). A loss brou<rht about by neu'liiient 
invitation will be covered, if that which immediately 
riuised the loss was a peril of the sea, even if the 
iieuli^ence is that of the assured himself, so Ioult as it 
,loes not amount to wilful misconduct (d). Damaj:;e 
done bv rats to a vessel which prevents her from sailini^ 
is not a peril of the sea ; but if in consequence of the 
ravaj^es of rats sea water enters the ship and damai^ea 
tlie caru;o, there is a loss by a peril of the seas (e). 

The case of The Inchmirce (/) should be noted. In 
that case a vessel was lyinii at anchor of. the shore, 
al>.)Ut to i)roceed on her voyage ; the boilers were beini; 
tilled bv means of a doidiey-cnginc ; owing to a failure 
on the part of somebody ou board to see that a certain 
valve was open, the valve remained closed, and conse- 
(piently, in the operation of pumping, water was forced 
back, split the air chamber, and disabled the pump. 
The House of Lords decided that the damage was not 

rl.nunt.s and incvitabU' accidents, other than llioj^c of (aptiire and 
d.t.iitk.u(Pliillili.S s. lO'J'J). 

(, ) Tlw XunlhoaSSl), 12 App. Gas., at p. 50<J, p<rl.or,l HF.nscHELL. 

((/) Triiukr <k Co. v. Tliniiu-', 'Ic. Marine lii--<urnii((. Co., [I8'J8J 
2 g. 15. 114 ; -i Com. fas. 123. 

(,) Hamilton v. Pandorf (1SS7), 12 App. Cas. ol8; 
.Vri-.r»KV. »%• .^(rn .l.^iiraJiC;; (.'->., [1912] A. C. 5()1. 

(/) Thame-i and Mersey Marine Insurance Co. v. IlamiUon (1887), 
12 App. Cas. 48t. 

cf. /;. D. 


,i ! 


fih- ■ 


Marine In.suraxck. 

caustvl by '• perils of tlie seas," iii»r by any cause similar 
to ■■ perils of the seas."' ami that the iiusurers were not 
liable on the policy. lu cousecpience of this decision 
a sj)ecial clause — styled The Inchmuree clause — is now 
usually added to the policy. It covers (amont,'st other 
ttiiuLTs) certain lo.sses caused by the ueiiliixence of master, 
luaiiners, enuineers, and pilots, or through explosives. 
etc.. or any latent dt^fect in the machinery or hull. But 
the operation of the clausi- must be confined to the 
specific causes of htss eiuimerated, and not extendetl to 
matters cjusdcm tjcncris. Thus, the clause has been held 
not to cover dama<j;;; caused to the hull of a ship by a 
boiler falling; into the hold while it was beintj lowered 
l>v a floating steam crane of which the tackle was 
defective (7). 

(i) '• F/re."— The peril insured a-;ainst is not mereh- 
imiatentional burning ; for instance, a fire voluutarilv 
caused in ord(H- to avoid capture by an enemy is 
covered by the policy {h) ; or a fire intentionally 
caused by a person other than the assured {i). A 
policy on jzoods will not cover any caused bv 
a fire resultiny from the condition in which thev were 
shipped (/i). 

(j) " Pirates." — The teini includes pas>;cngers who 
mutiny and rioters who attack the ship from the 
shore (/). But the expression mi; 4 be construed in 
its popular sense as meaning pers'ins who plunder 

ig) SMI {DiiJtic) Slitimerd, Lid. v. Morlrii. [lOIfi] 1 A. V. 304. 

(/() Gordon v. liimmington (1807). 1 Camp. 123. 

{,•) Midlmid f::^:r'n>r^ r.j, V. Smith (IS^^l), Q. B. D. r.tji. 

(<••) Boyd V. DiMoio (ISll), 3 Camp. 133. 

(0 Sch.dulf I., r. 8. 

Lloyd's S. G. Policy. 


iiulisciiminately for private jiain and not persons wh(» 
~.i:',.' pvopoitv for some public political end (m). 

(k) •■ rAjecM."— Clandestine theft, or theft com- 
mit tod !)}• any of the crew or passcnizers, ia not included 
111 tlio Wvm " thieves " as iis«»d in this clause of the 

il) •' Jettisons. "—'Un^ means the throwini: overboard 
Mt tackle iir cari^o to li,!,'hten the ship bona fide and in 
an t'.mer-ency. As a rule the insurer is not liable to 
indeiimily the owner of the goods if they were bein- 
. arried on deck or in deck houses ; but custom of tiie 
trade or express agreement may throw the loss on tlie 
insurer (o). 

(m) "Arrests, nslrnints, etc. . . . of /.mz/.s, prino<, 
■nul people."— Thi-i refers to political or executive acts. 
^uch as capture in time of war by an enemy, stoppa-o 
it neutral vessels suspected of carrying enemy's goods, 
.•mbargo in time of peace, etc. (p). A declaration ot 
war by His Majesty which renders the further prosecution 
of a vovage to an enemy port unlawfid is a restraint of 
piincos, aithou.'.'h the assured may voluntarily abandon 
the adventure (7). But this principle does not apply 
to an encmv ship proceeding to an enemy port, and in 
>uch case a mere declaration of war will not entitle the 
owner of British goods on board to treaty them as a 

[m) licpubliC of Bolida v. liidanvitij .Vutual Marine Assvrono 
CO., [ietOi»] 1 K. B. 785. 

(n) Schodule I., r. 9. 

:o\ Milioard v. Uibbcrt (1842), 3 Q. B. 120. 
p) Schedule I., r. lU. 

•7) British and Foreign Marine Insurance Co. v. banday d- to., 
i lltUi] 1 A. (J. 660 ; and sec post, p. 401. 


i St 

!■ ; 


Marine Insuranck. 

(onstriK tivc total loss, becauBC the ra])tnin of the ship 
puts into a ruMitral port of refii<,'e to avoid th** risk of 
captiiio. Itcfoio the peril has actually hcL'iin to operate (r). 
There iimst be an actual restraint in existcMice ; a 
reasoimldt' apprehension that a restraint will be im- 
])os('(l, thoiiuh justilieil by the event, does nut excuse 
the abandonment of the voyajic (k). Thus, where carfzo 
was insured a'jainst capture and there was every reason- 
able uround for antici])atinu that the vessel would be 
captured if she s.*ilcd, and the assured to avoid that 
risk dischari;e<i the cari^o before the vessel left port 
and abandoned it to the underwriters, it was held that 
he could not treat this as a constructive total loss, 
because the peril insured airainst had never beL'un to 
operate (<). The mere operation of a municipal law 
prevcuititiu the delivery of fj;oods at their destination 
(e.(j.. tlie landini; of cattle sufferinii from disease) is a 
" rostuiint of people " («). 

The |»ropeity of an alien enemy cannf)t of course 
be insured ai;ainst capture durinu war with this country ; 
but if such jiroperty were insured and seized by the 
Government of the assured before an adual state of 
war existed, the sxibsequeut breaking,' out of war would 
not invalidate the contract of insurance, althou<^h the 
rijj,ht to recover woxdd be suspended durinir the con- 
tiiuumce of hostilities (x). The insurer is not liable 
under this heading for loss occasioned by riot, oi by 
ordinary jutlicial process (?/). 

(r) Vic/.tr, ^V'/v ({.• Co. V. London Ai'-'iirancr Corjxnation, [iMih] 
A. C. 101. 

(«■) WntU, Walts A; Co. v. MiUui d: Co., [I'JlT] A. C. 227. 

(/) K'irkn>"ff V. Chinn Traders Insurance Co.. [19141 » ''^ B. 1121. 

(») Miller V. Law Accident Insurance Co., [1903] 1 K. 11. 712. 

(x) Jan-ion v. Driejontein Consolidated Minejt, (1!)02] A. C. 484 : 
7 Com. Cas. 2G8. (y) Schedule 1., r. 10. 

Lloyd's S. G. Policy. 


It is not unusual for insurers to stipulate by a sp.-cial 
, lause in the policy that thoy shall not bo liable for loss 
. dused bv capture or seizure. This clause is known as 
thft F. C. k S. .-lause (free of capture and seizure), and 
u.Miallv runs as follows:-'* Wnrranted free oj capture 
ieizure and detenUon and the coi'saiumas thereof or of 
nn>i attempt thereat piracy excepted, and aim from oil 
romcqucmes <>/ hostilities or ynrhke operations uhtther 
before or after declaration of wr^ it withdraws from 
the protection of the policy certain ri.^ks which would 
utherwise Le covered. But if a loss occurs the assured 
is not bound to prove that his vessel was not lost by 
the excepted causes, ^nd if nothing more be proved 
than the loss of the vessel at sea, that loss will fall \ipon 
tlie marine und'Twriters (z). For instance, where in 
anticipation of war the Government of the South 
African Republic seized ^old belonuin^ to its own 
subject, it was held that there was a seizure within 
the meaniny of the warranty and that the insurers 
were not liable on the policy (a). 

When the policy contains a warranty of freedom 
from capture, the insurer's liability ceases on capture 
of the vessel. Thus, in a policy a-:ainst total loss by 
perils of the sea, containing the F. C. & S. clause, a 
neutral ship carrying contraband during the Russo- 
Japanese war, was captured by the Japanese. While 
being navigated towards a Court of Prize, the ship was 
wrecked and became a total loss. She was afterwards 
condenmed in the prize Court. On a claim by the 
owners under the policy, it was held that when the ship 

(z) ilunro Dfice ^ Co. v. War Risks A^sociaiion, [19181 2 K. B. 7^ 
(,/) Robinson Oold Mining Co. v. AUiamx Inmrawx Co., [l.Hi. 
2KB. 489 ; affirmed, [1904] A. C. 359. 



l: f 

Marine Insirance. 

was first Mnz.'(l rli.^re was a tufal hv a capturo, the 
lawfulness ..f whirli was auth..iitutivelv .l.-toiinbed l.v 
a subsequent ( ..f the Prize Vu'nrt and that the 
c<ip(ors and not the assiirrd ),ad lost the vessel by ship- 
"ivck. Afcoitlinoly, the owners failed to recover IJ,). 

in) ''Barnilrif of the master and tuariners:'- Ihe^ 
term " barratry " includes every wron-ful act wilfully 
'•-'muiitted by th,^ master ..r crew to the prejudice of 
the owner or charterer (r). F<.r example, settin;; fire 
to or scutthnj; a shif. or employing,' it for smuL'filin-^ (d) 
are barratrous acts. 

(..) "All other ;>. n/*."— This means all other perils 
of a nature similar to those which have already been 
f*numerat(^d in the policy (c). 

(V) " In case of nny loss or misjurtune . . . miner 
or acceptance of ahandomnrntr~T\us is styled the 
•• suini,' and labourinc; clause." The object is to tu- 
coura-e the insurer and the assured to do work to 
preserve after an accident the property covered by the 
policy, and to make the best of a bad' state of affairs. 
Should they do so, the clause provides that their 
respective ri<;lits shall be in no wise prejudiced by any 
acts done in pursuance of such object, and that the 
assured shall be entitled to obtain his expenses con- 
sequent on the work from tlie insurers. But for this 
clause an assured mi^ht abstain from any attempt to 

(t) Aiidtrsen v. Marltn, [I'.tOH] A. (.'. .'j;j4 
^^(0) Schedule I., r. 11 ; and s.r fmh v. Hourrojt (180.!). 8 East. 

{d) Cory V. rSiirr (1883), 8 A pp. Cas. 31»3. 
(f) Schedule I., r. 12. 

Lloyds 8. IJ. I'olicy. 


<iiic'j.v\a\d wit'i |<t«(l pinportv for fear that 8ucli cttiulvict 
iiii'^ht Ko (leonit'tl a waiver of bin ii;:lit to abandon, 
.iltlmuuii un<lor siuli a cliiii^t* it is his duty to take 
n'aH(>iiai)lo iiumsiiios to .iveit loss (/). General average 
los«os an«l •■otitrihutiuns and salvai,'<^ (liarLjfs ans not 
''■iuV(Mal)lo ii)id<u' the, nor are expenses incurred 
ro avert loss not covereil by the policy (7). .More')ver, 
it the insurer incurs ex[)ense.s which, it tluiy had been 
incurred by the assureil, would have been recoverable 
fiotn the insurer under the clause, the insiuei' cannot 
ccover them from the assured (/<). 

i<|) " And no we the (insurers,"' etc. — This clau^;e 
•etjuires modificatitm to adapt it to the needs o£ an 
luderwritiny, limited liability company. Each insurer 
wiio si^ns. si^ns ou his own behalf only, and aiirees to 
indenmit'y the aasuretl to an amount not exceeding the 
sum he places next his name. Where there is a loss 
recoverable under the policv. each insurer, if there be 
several, is liable for such proportion of the loss as the 
amount of his subscription bears to the valued or 
assessed amount of the loss ; one insurer is not liable 
f(»r another's default unless it be expressly so agreed (i). 

(r) " Conjessing oursehcs paid,'" etc. — This recital is 
-t>metimes varied by statin:; that the persons negotiating 
the policy have agreed to pay ; in either case, unless 
otherwise agreed, the broker is directly responsible to 
•he insurer for the premium (A). The custom making 

( / ) Section 78 (4). 
ig) Section 78 (2), (3). 
(A) Crouaii v. islatikr, [1<J04] 1 K. 13. ST. 

(«) Cf. Tyser v. Shipowners Hyndicate (Heassurcd), LlsyiiJ 1 IJ. li. 
135 ; 1 Com. Ca.-!. 224. 
(/.) Section 53 (1). See ante, p. 150. 

o 2 


Marin K Insuranck. 

the broker and not the assured liable to the insurer for 
the preiiiiuin extends also to a "company's policy," 
which contains a promise by the assured to pay. Even 
this docs not make tlie assured directly liable to the 
insurer, lor payment must be made accordiui; to the 
custom, i.e., by the broker {/). In the absence of fraud, 
an acknowled.Ljment on the policy of the receipt of the 
premium is conclusive as between the insurer and the 
assured, but not as between the former and the 
broker (in). 



(s) '■ X.B.," etc. — This clause is styled the " memo- 
randum "' : its object is to prevent the insurers from 
beim; liable f(jr loss on certain j^oods peculiarly liable 
to damaue on a sea voya^e, or for certain small losses 
which must almost necessarily occur, but which might 
increase the liability of the insurer beyond what he 
could calculate on. The meaning of the clause haiS 
been much considered, and it is believed that the result 
of tlie cases may be summarised thus : (i) the insurer 
is not liable to indemnify against a partial loss or 
damage to the first group of goods (viz., corn, fish, 
etc.) uulesb the loss is a general average loss (n), or 
unless the ship be stranded (u) ; (ii) he is not liable 
to indemnify agaiust a partial loss or damage to the 
second group (viz., sugar, etc.) \mless the damage 
amounts to five per cent, of the value of the thing 
damaged ; (iii) he is not bound to indemnify against 

(I) Uniixr.-<o /Murancc Co. of Mil<t)< v. Merchtmta' Mania In- 
S7,rana Co., (18!»7] 2 Q. B. 93 ; 2 Com. 2S, 180. 

(m) Section oi. 

(«) Sec ]Kjil, |)|). 450 — 45."{. 

(o) The term " average unless gemiul," means a j)artial loh^ of the 
subjt'ct-matter insured, other than a ueneral average loss, and docs 
not inclurle " partieular rli,\ri;es."' 

/ - . 

Lloyd's S. 6. Policy. 


partial loss or dam.- to the ship, freight, or any goods 
other than the abo unless the loss amounts to three 
per cent, of the value of the thing lost or damaged, or 
unless it be a general average loss, or unless the ship be 
stranded. It should be stated that a general average 
loss may not be added to a particular average loss to 
make up the specified percentage {p) ; but in a voyage 
policy successive losses, though from different perils, 
Jiiay be added together for this purpose, and in a time 
poli(!y successive losses occurring on the same voyage 
may be added together, but not losses occurring on 
distinct and separate voyages (q). The meaning of 
■■ stranding ' in this memorandum is not always very 
clear ; it moans that the ship has by some accident, or 
(at any rate) out of ordinary course (r), touched the sea 
bottom or something in immediate contact with it, and 
lias thereby been retarded on her course fi>r an 
ajjpreciable length of time. The fact tliat the stranding 
[la.s taken place renders the insurer liable (save to 
goods in class 2) for all losses on the goods, though 
happening bef(ue or after the stranding, and not 
attributable to it (s) ; but the goods must be actually 
on board at the time of the stranding (s). The words 
" sunk or burnt " are sornetimes added at the end of the 
memorandum. In sucJi case a ship is not " burnt " 
within the meaning of the policy, unless the injury by 
lire is such as to constitute a substantial burning of the 
ship as a whole {t). 

ip) Section 76 (3). 

iq) Stewart v. Merchant Marine Insurance Co. (1886), 16 Q. B. D. 

(r) Kingsford v. Marshall (1832), 8 Bing., at p. 463. 

(«) Schedule I., r. 14. 

(0 The Gknlivet, [1894] P. 48. 




' 1 

. 4 



Marine Insurance. 

Another clause, bein^ an additional iiniitation (>t the 
•nsurer's liability, is of frornient occurrence ; it i< 
stvled the F. P. A. (free of jiarticular averaj^e) clause, 
iiud luns thus : " Warranted free from particular 
nroni'it' unless the vessel or cruft be stranded, sunk, or 
burnt, each croft or lighter beii"i deemed a separate 
oisantncf. Underwriters, notuithstandinff this xcarrant'j 
tn jiaif for anjf danutge or loss caused by collision with anj/ 
n/hcr ship or craft, and any special charges for ware- 
house, rent, reshipping, or foruarding, for which they 
'Could otherwise be liable. Also to pay the insured value 
of any package or packages which may be totally lost iti 
transhipment. Grounding in the Suez Canal not to be 
deemed a strand, but underwriters to pay damage or hss 
which niay be proved to have directly resulted therefrom." 
?>ave in the matters speciidly leforred to in this clause, 
the warranty " free from }»artirular avera;;e " prevents 
tlie assured from recovering for a loss of part otiier 
rhau a loss incurred by a <ieneral average sacrifice : but 
if the policy covers pai<e1s separately valued, or when 
bv usane the contract is apportionable, the risk for loss 
of an apportionable j)art is on the insurer (m). This 
warrantv does not exonerate the insurer from salvaj.e 
chariics or from liability under the suinu and labourin- 
clause, if expense be incurred to save the subject-matter 
ol insurance from a loss for which the insurers would 
have been liable (x). Such expenses are termed " par- 
ticular charuea "' (//). 

A further clause, which is either printed in the body 
of the policy, or put in the iiiiULrin. or otherwise attached 
to the policy, is the liuniiun/ Down Clause, the object 

((() Section ir> (I). (r) Section 70 (2). 

(y) Section lit (2). 



(it which is to cover the shipowner from h)3s iu the 
ii.tture of damages payable by him by way of com- 
pensation for collisions between liis and other ships caused 
l)\- the default of those in cliarLie of his ship. The 
cnllision need not be directly between the insured ship 
iiiul the vessel entitled to compensation, and where, 
.twin;,' to the net;li'ient naviyation of the insured ship, 
a fhird vessel is run down by a siiip which has been 
fdiced into it through beinu struck by the insured ship, 
liie damages payable to the thi'd vessel will be covered 
bv this clause {:). 


PviMnsurance occurs when one insurer insures the 
li-l; lie has undertaken with another insurer. 

The law applicable is in the main the same as that 
which governs an original insurance. The contract of 
rc-insuiance is also a contract of indemnity, and if 
the oiiginal insurer enters into a compromise with ttie 
I'rininal assured, paying less than he was liable for, tlie 
rc-insurer is entitled to the benefit of that compromise («). 
The i-e-insurer usually undertakes, with regard to the 
ori'jiinal policy. " to pay as may be paid thereon." 
These words do not create any liability unless the re- 
insured actually became bound to pay under the original 
policy ; it is not sufficient that he shiudd have paid ii\ 
good faith in the belief that he was liable (6). A re- 
insurer need not give notice of abandonment (c). The 

(:) Fenu'ick (W. F.) v. Merchants' Murine Insurance Co., [1915] 
3 K. U. 290. 

(a) British Dor^inions Ueneral Iiuiurance Co. v. Duder, [1915 
2 K. 15. 394. 

(6) Chippendale v. Holt (1895), 1 Com. Cus. 197. 

(r) Section ti2 (8) ; find si-i- ixrH, pp. 402, 40.'{. 


Marine Insukanck. 

(loctriue oi snbrotration (d) applies to re-insurance, and 
the re-insurer is entitled to his proper proportion of any 
tiiuuey whicli has been or could be recovered by en- 
forcing' a riu'ht that would diiiiinish the loss of the 
ori^'inal insurer (e). 


Double Insurance. 

A double insurance occurs when the assured effects 
two or more policies on the satne interest and adventure. 
If the two to'ifttlior cause an over-insurance the excess 
rannot be lecovered. but the assured may sue on 
whichever p>.licy he desires, and may recover the whole 
sura to which he is entitled by way of indenmity (/). 
Where the policy is a valued policy, the assured must 
-ive ( redit as atrainst the valuation for any sum 
received bv him under any other policy without re-iard 
to the actual value of the subject-matter insured ((/) ; 
and where the policy is unvalued, he nnist tzive the like 
credit as a-ainst the full insurable value (h). As 
betwecMi the insurers each is liable to contribute rate- 
ably his pi()})ortionate part (i), the assured holding 
any *iX(<\s,s he uuxy have received in trust for such of 
the insuri'is as are inter se entitled to it {k). Any 
insuier who pays more than his proportion of the loss 
is entitled to contribution from the other insurers in 
the same way as a surety who has paid more than 
his proportion of the debt (i). 

Id) Sec iinti', ji. 3(i<», post. p. 403. 

(f) AasiciiTiziiiin 'nturali dt Trieste v. frnpre-is Assurance ( (■)■ 
joration, [l'.M»7] 2 K. 15. 814. 
(/) Sfction :i2 (2) (a). 
Oj) Section :i2 (2) (li). 
(/() S<ction :{2 (2) (c). For the mode of ascirtaining insurabli 


ialu<>, .•*<•(' s. III. 
{() S, ction so (1). 

{h) Section 32 (2) (d). 




Alteration of a Policy. 

In accordance with the general principles of contracts 
.111 unauthorised alteration in a policy has the effect 
nt niakini^ it void as against all who were not parties 
t-o the alteration (I). A material alteration by consent 
is usually made by indorsement simied by the parties, 
but (i) the alteration must take place before notice 
of the determination of the original risk ; and (ii) m\ist 
not extend the time beyond six months in tlie case 
uf a policv made originally for less than six months, 
nor bcvond a year in any other case ; and (iii) no 
additional or further sum may be insured by the 
alteration (m). 


Except where otherwise aureed. the insurer is liable 
for anv loss proximately caused by a peril insured 
against, even though the loss would not have occurred 
but for the ueuligence oi misconduct of the master or 
crew. The rule that the loss must bo traced to a 
" proximate cause " has always been riuorously a)tplied 
in insurance cases (n). The du.->e wiiich is truly 
proximate is that which us proximate in eliiciency. 
That efTiciency may have b»'cn preserved althou-ii other 
causes mav have meantime sprunif up which have not 
ve destroyed it, or truly impaired it. and it may 
culminate in a result of which it still remains the real 

li) Ante, pp. \H, AUk 

Urt) The St.iinp Alt, IS'JI, .-*. '.Ki. Thr msiriion of a continuatiun 
elaus(! 18 now iMTinissibK-, sw aiUt, p. 37b. 

(n) Soi- /« r IajhI Sumner in Becker Gray ct to. v. London Assnnuice 
I orpo'ation, [1918) \. I'., at pp. 112 et aeq. 







Marink Ixst rancf. 

• ■tiicieiit cause to wliicli the nvcnt ciin iie ascriWi'il (o). 
Thus, it ii ship iusuKvl ii-ainst all conswjucucc.s <>} 
hostilities mus upon thi- smik'en wreck of a vessel 
toipcd.icl |)v ail <'m;iiiy suhtiuiiine. thf; act ot hostility 
1- no! th<' pixxiiuiitc cause ot tho loss ; hut it would be 
.ithfiwi-c if tlie enemy had deliljeiately sunk a vessel 
til a nairow and shallow entrance to a poi't lor the 
piupo^f ot dania'iin.1 vessels tryin- to make the port (;>). 
Jiut the iiisui' ! is not lial»le tof oi'dinarv wear and tear, 
"or tor ]>i-~ ( ausi'd 1)\- iniiereiit vice of tlie suhjcT- 
matter ms'ired. or h\, or vermin (y). 

Losse- 111 ot two kinds : jitiriinl. wheie tiie subject- 
tiiatte- -f !he iusuraiice i> only partially damaged, oi 
wueie tliere is i)ut an obligation to i ontribute to i:onera1 
i\er e .uid tulnl where tlic subje-'t-niattcr is wholl\- 
desr ved. or h, - become .mi (laina-ed that the owner is 
d ill abaudonin'j; it. Tot id lo>-tvs are sub-divided 
•Kil tndil lossi'x iind tijiistriictirc tnlnl losses. An 
Total loss ()ccui> when th<' .subjeet-malter is 
V de-troy. il. ot irieparalily dama.Lied. or wliere 
Mi-ed - irretrieviiblv (h-prived of it (r) : e.(j.. when 
'•ea.>- any loiuei' to lie a ship, and I)e((.nies a 
und' t planks ; or when uoods are so damaged 
a^ .sed to exist in .such condition or form a> 
: -'■ denomination under which thev were 
•r when lost to the owner by an adverse 
■e of a court of competent jurisdiction in 



.1 s 

a^ t . 
to an \v- 
i reu 
valid d. . 

(d) Leijhind Shipping Co. v. Xoruich Iniini lire Ivsnrnvr, Co.. 
f I'.tlSj .\. ( ;. ;i5«. p<:r [.ord Shaw of DcNnr.Mi.ivE, at p. 'M\\*. 

(p) William Franc- Finwick a- (Jo. v. Sorlh of Lualand fk 
.lMocju/io«, [1017] 2 K. B. 527. 

('/) Section 55. Subject to aijrci'ment, s.ilvagc cliargcs iiiPiirrcd ih 
l>n'vi'iiting a loss by pi-ril-; insured against, may bf ncovircil as a to-- 
l>y those jxrils (s. ()5). 

(r) Section 57 (1). 



( Mii-oqufnte t»f a peril insuioii a<:aiust (s). But posses- 
M'<n lostorcd after action hrouulit does not disentitle 
tlio owners to recover as lor a total loss (I). 

Whore the ship concerned is missin'.', her actual total 
iii>s may be presumed, it no news hi; received utter the 
lapse of a reasonable time. 

A constructive total loss occurs where the subject- 
matter insiued is reasonably abandoned on account of 
its actual loss appearing to be unavoidable, or because 
It could not be preserved from actual loss without an 
expenditure which would exceed its value when the 
expenditure had been incurred (»/). Thus, there is a 
(instructive total loss wheie a vessel has sunk in deep 
water and cannot be raised without incurrin;^ an 
expense greater than her value (a::), or when a ship has 
i.eeu so dania;:ed that the cost of rei)air would exceed 
hei value when repaired (y). The assured is not entitled 
X'l add the wreck value of the ship to the ol the 
icj)airs (:). Nor can the insurers by gratuitously 
iuterveninL; and incurrinu an expense which a prudent 
owner woidd not have done, convert a constructive 
total loss into a partial one ; e.g.. Ijy raisin<; a vessel 
which has been sunk in deep water and abandoned by 
the assured (a). 

i») i:.'/., sftk' by tlu- Court of Admiralty {Cro/<miwn v. UKit (1888). 
l:! App. ('as. 100). 

it) Riii/t V. Uoynl Exchange Assurance foTi'oraUon, ^181)7] 2 Q. B. 
IS.j ; 2 (.'om. Cas. 201. 

(m) Section (iO (I). 

(X) Section (iO (2) (i) ; Ac"/' v. IlaUiday (1860), L. U. 1 g. li. 


(y) .\.s to taking gfn»ral avi-ragc contributions into account, s-oc 
.-. r>0 (2) (ii) ; Kemp v. HiiUiday, supra. 

(:) Hall V. Ilayman, [1912] 2 K. B. 5. In this rtsiKot tlu- law as 
it stood before the Act has b<'on altered by section GO (2) (ii). 

(a) .•^ailirig Ship Blairmore Co. v. Marr.:di,\ [18118] A. C. OltlJ ; 
:<. Com. Cas. 2H. 


Marine Insurance. 

Auain. there is a constaictive total loss where the 
assured is deprived of his shipor j,'(>()ds by a peril insured 
af^ iiud it is unlikely that he can recover them ; 
but it at the date of the comnienceiuent of the action 
tln> n'covory of the vessel or noods is a matter of un- 
certainty and the assureil cannot show that on the 
balance of probability the ship or ^'oods will not be 
recovered, hia claim will fail (6). 

When ^oods arc insured at and from a port of loading 
to a port of ilestination. there is a loss if the adventure 
is frustrated by a peri! insured against, although the 
Uoods themselves may (diitinue in existence uninjured 
and be under tlie control of tlie owner. The subject- 
matter of the insurance is not merely merchandise ; it 
is also an insuranci" of its safe arrival at the desiiinated 
port. Accordiniily, althou<ih in possession of tlie uoods, 
the owner may in such case, on ;.'ivinii due notice of 
abandonment, recover for a constructive total loss (c). 

Notice or .\u.\nuonment. 

In cases of constructive total loss, notice of aliandon- 
ment nnist ■generally be jfivon ; othi^rwise — unless notice 
be waived by the insurer — the loss will be considered 
as partial [d). A notice of abimih)nment nuist indicate 
the intenti<m of the assured to abandon his insured 
interest unconditionally (e). e.g., an owner cannot 

(>,) Stction tiO (2); Polurriitn S.S. fo. v. Yovntf. [19J5] 1 K. M 
y22 (ca|ptun- of neutral ship by lRllig< rent). 

(r) liritish (mil Fortigii Marine lihturaiifi Co. v. Sandiiy d: ( « 
[lltKij A. C. <mO. 

((/) Sction <i2 (I), (S). .\oticH.- of abandonni' nf is also iinncocssnrv 
when-, at the finic when tln' as^iun■(^ riceivtrt notJC< of the loss, tin 
insurer oould not [Mi'^sibiy Im mtit by a nctticc (s. ♦»2 (7)). 8w al-o 
Roura .<• t'lrri/tis v. Touni ml. jl'.tl'.tl Ik. B. 189. 

(f) S.ftion ti2(2). 

: ! 




abandon part of a ship. The notice must be ^iven 
with roannnahle dili-^enco after the receipt of reliable 
information, a reasonable time for inquiry being allowed 
where the information is of doubtful character (/), 
i.e., at the earliest opportunity consistent with making 
uKluiry as t<» the circumstances ; and it must be given 
by the owner or a properly authorised agent. It need 
not be in writing (g). 

Wliero notice of abandonment is properly given the 
assured is not prejudiced by the refusal of the insurer 
to accept it, b\it the notice ia irrevocable aftoi' accept- 
ance, express or implied, and acceptance is a conclusive 
admission of liabiUty for the loss (h). 

When an imsurer receives vahd notice of abandon- 
ment, ho is eiititleil to stand in the place of the assured 
iis to the subject-matter of the policy (i) ; hence, the 
effect of a proper notice of abandonment is to transfer 
the rights (including the right to any fieight earned 
subsequently to the accident) formerly possessed by the 
assured to the insurer, and such transfer dates back to 
the time of the atcident (k). If a ship is «-arrying the 
owner's L;o«>ds, the insurer is entitled to reasonable 
remuneiation for tlie carriage of the goods subsequent 
to the casualty causing the ^l). 

If after payment of the loss the vessel arrives safe, 
she is treated as having been abandoned, and becomes 
the property of the insurers (m). 

(/) Scoti(jat>2 (3). 

(g) Section t>2 (2). 

{h) Section (12 (4)— (6). 

(♦) Section t)3. ,r t c- • 

(k) St'ction 63. See Barclay v Stirling (1816), 5 M. & ^. '> 

(I) Section 63 (2). 

(•») Hmii^mun v. Thornton (lf>l6), Holt, N P 242. 



Marine Ixsi- range. 

Adjistment or Losses 

Til." ..ttl.-iu.-iii b.'t we'll rli.- assuml ati.l tho iusurt'r 
IS St vl.'.l th.. udjiistmont, and is usuallv settled on l).Oialt 
Hi tlu! paiti.'.s by their l.n.k.Ms. If an insurer sottl.w 
with tlu! hr(.k,.r, th.» foriii.T is. arcordin^' td Lloyds 
iul.'>. dischai-ed as a-aiiist th.- daitns ,.f the ussuicd ; 
l»>it at Ian- tliis i,d.« has not Inron fully leco-niso.i. imr! 
iinl.-ss it (iui h,^ sjiown that the assured was awaiv n\ 
tli.M-u.toiu. i. it likely that in futuf.' the courts will act 
• •11 it (//) 

>'/////.— As to the amounts allow.Mi (in the al.scncc of 
.■xpivss provision in the policy) (i) In J.e caso of a 
partial lo..i f. th.' ship, th.' insurers will have t.) pav the 
<ost i.f tuo repairs less ciistoniaiv deducti.»ns (o), which 
mean.s generally that thev will pay two-thirds ..i tl..' 
expenditur." on the repairs, the ..ther third hcin- an 
arhitraiy amount supposed to be e(|uivalcnt to tlie\:ain 
obtained bv the own.-r by the substitution ..f new 
materials an.l work for ol.l. But on a first vova^e they 
usually have to pay the wliol.'. If th.^ .ship "is n<.t r."'- 
paired. or ojily partially repair.-d. the assured i.s entitled 
to in.lemnity lor the i.'as.jnable depreciation arising 
from the unrepaire.l damaj^e ; but he cannot recover 
more than if the ship had been impaired {p). (ii) In the 
case of a total loss, if the policy is a valued p.)licy. the 
amount pavable is fixed in the policy. If the policy is 
unvalued, the amount payable is the full insurable value 
of the ship at the commencement of the risk {q), which 

\V 'Ml "'" •^'' "■"'■' '• -■"'«'•'/"" (1838). 4 M. & 

(0) Soction .19 (I). (^,, Section 69 (2), (3). 

(7) S.ction 08. Th.- muh r.covcrable is called the m.-.n^ire of 




iiitlii<los (lutfit, stores, provisions, numry advanced for 
M'am<m"s wanes, toyetluir with tlm n»st of iiistirance (r). 
Ill tli(( caso of a steamer, ' sliip ' includes machinery, 
liuilers and coals, etc. (r). 

(inixls. — In the case of a total loss of yoods. when the 
pulley is unvalued, tlie assurt'd may recover the insurable 
v.ihie, i.e., the prime cost of the yoods, plus expenses of 
shippini^ and insuranci; changes («) ; if valued, then the 
amount a'^reed. In the case of a jHirlial loss, subject 
ro auv aureiunent, where part of the ^oods is totallv 
lu->t and the policy is valued, the sum rec(»verable is 
such proportion of the sum fixed by the policy as the 
insurable value of the part lost bears to the insurable 
value of the whole, ascertained as in the case of an 
unvalued policy (/). Where part of the L;oods are lost 
and the policy is unvalued, the sum recoverable is the 
insurable value of the [)art lost (?<). \\'here all (»r part 
of the j^oods arrive damasked, the assnred is entitled to 
such proportion of the sum fjxed fin the case of a valued 
policy), or of the insurable value (in the case (jf an un- 
valued policy), as the difference between the ^ross 
sound and damaized values at the place of arrival bears 
to the uross sound value {x). 

General Average Loss. — Unless the policy expressly 
provides to the contrar}', where the assured has incurred 

iiuli'Uinity, vach insurir bi'ing liable for vuch proporl ion of the mfasuri- 
uf indoianity a^* the amount of his subscription bears to the value 
llxed by the jKjlicy or to the insurable value (s. 0"). 

(/•) Section in (1); Sched. I., r. 15. 

(«) Section lt> (3). 

(I) Section 71 (1). 

(m) Section 71 (2). 

(r) Section 71 (3). As to the unaniiiL' of " ^ross value," see 
.. 71 y4). 






III 3.2 



1 2.5 






I i ci'A Ma ^' i.t'eet 

resti^t. Ne« ro'k '4609 USA 

f ■ 482 - OJOC - Phone 

'■ 288 - '3989 - Fa. 


Marine Insurance. 

a j^euerul avcraj^e {y) expenditure or suft'ered a general 
averauo sacrifice, he may recover from tlie insurer 
without enforcing liis rights of contribution (z). Again, 
if the assured has paid or is liable for any general 
averaiio ct-ntribution, lie is, subject to any special terms 
of the policy and to the limit of the sum insured, entitled 
to be indemnified to the full amount of his general 
average contribution or to a proportionate part, depend- 
ing on whether the subject-matter liable to contribution 
is or is not insured for its full contribaiory value (a). 
The same rule obtains where the assured is owner of the 
different interests, altiiough in siicli a case there could 
be no contribution in fact (6). 

In the absence of express stipulation, the insurer is 
not liable fur any general average loss or contribution, 
which was not incurred for the purpose of avoiding a 
peril insured against (c). 

Unless the policy otherwise provides, an insurer is 
liable for successive losses, even though the total amount 
may exceed the sum insured ; but a partial loss, not 
made good, followed by a total loss under the same 
policy, can only be treated as a total loss {d). 


Where the insurer pays for a total loss either of the 
whole or in the case of goods of any apportionable part, 

(y) Soe post, p. 450, when- the mfaniug of "general average " i» 

(2) Section G(5 (4). 

(a) Section 13. '■'uc insurer's liability for salvagi charges nius^f be 
Joterinined on the lik(- ])rinci])le (ibid.).' See anti, p. 380, as to mode 
of a-ssesaing amount payable under a valued policy for a general 
average loss. 

(b) Section >¥i (7^. 

(c) Section OU (0). (</) Section 77. 



he becomes entitled to the iuteiest of the assured in 
the subject-matter insured, and is subrogated to all his 
rislits and remedies therein; and where an insurer 
pays for a partial loss, he acquires no title to tlie 
>ai)ject-matter insured, or such part of it as may remain, 
Dut is subro<iated to the assured's rights and remedies 
therein, in so far as the assured has been iudonmifiod 
by payment (e). 

Thus, the insurer is subroiiated to the rights of the 
assured only to the extent to which lie lias insured, the 
assured being enti^iv^d to benefit to the extent to which 
he has left himself uninsured. The following case will 
serve as an illustration : The owners of a schooner 
insured her for £1,000 under a policy stating her value 
t._. be £1,3D0. The schooner was totally lost in a 
collision with a steamship, and the insurers, having 
paid the £1,000. sued the steamship owners and re- 
C(jvered £1,000, which was found to be the value of the 
schooner in the action :—//t'W, that the owners of 
the schooner were entitled to be treated as their own 
insurers for £350, and, therefore, the £1,000 must be 
div.-ded between them and the insurers in the proportion 
of their respective interests, viz., f^^,', and ^^^^^ {J ). 

On the other hand, if the ship is valued in the polic\ 
at less than the real value, and a proportion of the loss 
is recovered by the assured from the owners of another 
vessel in a coUision action in which both ships were held 
to blame, and such proportion is based on the real or 
hi»her value, the underwriters who have paid a total 

(e) Section 79 ; North of Eitglcuid, etc. Aasociaiion v. Armstrong 
(1870), L. R. 5 Q. B. 244. Sti- further as to subrogatiou, ante, 
p. 3G9. 

(!) The CommonweaUh, [1907] P. 216 ; and see b. 81. 



Marine Insurance. 

loss will be entitled to the whole sum recoveiotl, up to 
the aiiutiint paiil by them on the policy {g). 

Return ok the Premium. 

Ill tJK^ abseiicx' of fraiul or illcuality uu the pair 
"I the assured or his aLreuts, wiiere the consideratiou 
tor the payment ot the premium totally fails tiie 
premium becomes returnable to him ; where the con- 
sideration partially fails, a proportionate part is return- 
able, but only if the premium is apportionable auc 
there is a total failure of any apportionai)le pait of 
rlie consideration (/<). Thus premium, or a ])art of 
it, is returnable, if the {)oIicy is void or is avoided bv 
tlie insurer from the commencement of the risk (?) ; 
if the subject-mattei' insured, or on apportioiuible i)art 
of it, is never subjected to the risk {k) ; if tlie assuied 
had no insurable interest at any time durinji the cur- 
rency of the risk and the policy wa.> not effected by wav 
of -amin- or wauerini; {I). When the assured over- 
insures on an unvalued policy, a proportionate pait of 
the premium is returnable (m). Where the assured has 
over-insured by double insurance a proportionate part 
of the several premiums is returnable, except wlien the 
double insurance is effected knowinuly by the a>.>ured ; 
and when the policies have been effected at diff'er^'nt 

(.7) Thames and Mcnoj Muript l,i.<,iruuc<. Co. v. liritisk and 
Chdian S.S. Co., Llt)15] 2 K. B. 211 ; affirmed, [lOIti] 1 K. B. 30, ( ' A 

{h) Section 84 (1), (2). 

(t) Section 84 (3) (a). 

(f:) Section 84 (3) (b). But if inMiied " Ium or not lo.-t," tJie lact 
that, nnknown to tlie m.-urer, the hhip liad in fact arrived in safety 
at the date of tho conehi:?ion of tlie contract to insure, does not 
entitle the assured to a ntuin of i.remiuni (ibid ) 

(I) Section 84 (3) (<'\. 

(m) Section 84 (3He). 



tiiiiG^. no premium is returnable in respect of any 
earlier policy which has borne the entire risk, or on 
which a claim has been paid in respect of the full sum 
insured (n). 


By a warronty tlie assured undertakes that some 

{•articular thins^ sliall or shall not be done, or that some 

condition shall be fulfilled, or lie affirms or negatives 

The existence of a particular state of facts (o). " A 

warranty in a policy of insurance is a conditicm or 

contingency, and unless that be performed there is no 

icntract ; it is perfectly inunaterial for what purpose a 

warranty is introduced, but bein^- inserted the contract 

does not exist, unless it is literally complied with "' (p). 

A warranty, therefore, when once introduced nuist be 

exactly complied with, whether it be material to the 

risk or not, otherwise subject to any express provision 

in the policy, the insurer will be discharged from the 

date of the breach ' f warranty, though the loss had 

nothing whatever to do with it (o), and though the 

breach of warranty arose owing to events beyond the 

control of the warrantor (y). A warrantv mav be 

express or implied ; and if express, must be inserted in 

or incorporated by reference into the contract (r). 

If. owing to a change of circumstances, the warranty 
no longer applies to the circumstances of the contract, 
"• if it is rendered unlawful by legislation, a non- 

()() Section 84 (3)(f). 
lo) Soction 33. 

(p) Lord Mansfield in De Ilahn v. Harthy (1780), 1 T. R. 343. 
(7) Hore V. Whitmore (1778). 2 Cowp. 784. 
(r) Sections 33, 35. 



Marine Insurance. 

compliance witli it is excused (s). \Vliere a warranty 
has been broken, it is of no avail for the assvired to 
remedy tiie bieach and comply with the warranty before 
h)ss ; but the breach may be waived by the insurer (s). 

A representation is a statement made by the assured 
to tlie insurer re^ardinu' the proposed risk, but it is 
not an iuteiiral part of the contract itself. If made, and 
if material, it nmst be substantially complied with {t). 
It seems iheu to dilTer in effect from a warranty in this, 
that whereas a mis.epresentation if untrue entitles the 
insuier to avoid the poHcy only if it is material, a 
warranty avoids the contract under any circumstances ; 
and further, that whereas substantial compliance is 
sufficient in the case of a representation, strict com- 
pliance is needed for a warranty (u). 

The more usual express warranties are — (1) to sail 
on a «^iven da\' ; (2) that the vessel is safe on a par- 
ticular day. This is complied with if the vessel is safe 
at any time on that day, thoufih at the hour when the 
policy is si;;ned she has been lost (x) ; (3) to sail with 
convoy ; (4) that the ship is neutral. This implies a 
condition that she shall be neutral at the commence- 
ment of the risk, and that, as far as the assured can 
control tlie matter, she will remain neutral during tlie 
risk, and will carry the proper papers {y) ; (5) that the 
gooils are neutral ; which implies that they are neutral 
owned, and, so far as the assured can control the matter, 
that thev will be carried to a neutral destination by a 
neutral ship (,y). 

(.«) Section 34. 

(I) De Hahn v. llurlky (178G), 1 T. R. 343, 345. 
(m) Th(> word " warranty " lias not in insurance law the meaning 
it bears in general contract law. 

(x) Section 38. (!/) Section 36. 



The implied warranties are — (1) In a voyaj^e policy, 
that at the commencement of the v<)ya<^e the ship shall 
be seaworthy for the purpose of the particular adven- 
ture (z). If the policy contemplates a voya^je in 
ditl'erent stages, involving different or varied risks, it 
will suffice if, at the commencement of each distinct 
staj,'e, she is seaworthy in view of the risks to be 
encountered on the next stane (a). In a time policy 
there is no impUed warranty of seaworthiness at any 
sta^e of the adventure {h) ; but where, with the privity 
of the assured, the ship is sent to sea in an uuseaworthy 
state, the insurer is not liable for any loss attributable 
to unseaworthiness. This means, however, the par- 
ticular unseaworthiness of which the assured had 
knowledge, and if a ship is unseaworthy in two respects, 
to one only of which the assured was privy, he can 
recover for a loss caused by the other (c). (2) In a voyaj^e 
policy attachin<j; whilst a ship is in port, an impUed 
warranty that she is reasonably lit, at the commence- 
ment of the risk, to encounter the ordinary perils of that 
port (d). (3) In a voyage poUcy on goods, there is an 
implied warranty that at the commencement of the 
voyage the ship is not only seaworthy as a ship, but also 
that she is reasonably fit to carry the goods (e). (4) That 
the venture is a lawful one, and will, so far as the 

(«) Section 39 (1). A ship is seaworthy if she is reasonably fit to 
encounter the ordinary perils of the seas in view of the adventure 
insured (s. 39 (4) ). 

(a) Section 3!t (3) ; and se(^ (Ireenock Steamship Co. v. Maritime 
Insurance Co., Limited, [1903] 2 K. B. 657. Sec also poH, p. 431. 

(h) Section 39 (5). 

(c) T'homa-1 v. Tync and Wear S.S. Freight Insurance Association, 
! 1917] I K. B. 9:{S. 

(d) Section 39 (2). 

(e) Section iO. See Daniels v. Harris (1875), L. R. 10 C. P. 1. 



Marink Insiranlk. 

assured can control it, be rarrit'd out in a lawful 
inannor ( /). 

There is no implied warranty as to tlie nationalitv of 
a ship, or that her nationality shall not he chan"ed 
durinu the risk (g) : but if a ship is expressly warranted 
neutral there is an implied condition that, so far as the 
assured can control the matter, she shall be properlv 
documented (//). 

(/) .Section -11, 

If) Si ft ion :i7. 

ih) Section W, (2). 

If' ! & 

( 413 ) 


This contract belongs to a group which is classed 
together under the head of Bailments (a) ; these include 
[>ledge, loan, and deposit. A bailment is defined by 
Sir William Jones {b) as " a delivery of goods in trust, 
<<n ii contract express or implied that the trust shall be 
duly executed, and the goods re-deUvered as soon as 
tlie time or use for which they were bailed shall have 
•'lapsed or be performed." The person who receives the 
•ioods is styled the bailee, the person who delivers them 
the bailor. 

Common Carriers. 

A comn\on carrier is one who undertakes to carry 
tor hire from place to placo (c) the goods of any one 
who employs him. Such are the owners of carriages 
o'' barges taking goods regularly fronx town to town, 
also railway companies, to the extent to which they 
carry goods generally and by profession (d). But a 
person who conveys passengers only is not a commou 
carrier (e), nor is a carman who does casual jobs under 
special contract (/), nor n wharfinger who carries his 

(a) Tho law on this Load is fullv considered in Cogg^ v, BtrnarJ, 
and the notes to it in 1 Sm. L. O. (li'th e.l. 191 . 

(6) Law of Bailments, p. 117. 

((•) yugerU v. Smith (187t>). 1 C. P. U. 19, 423. 

(rf) Joluisoti V. Midlatid Hail. Co. (1849). 4 Ex. 3G7. 

(?) Christie V. Griggs (1809), 2 Cami). 79. 81. 

(/) Brind v. Dak (1837). 2 Moo. &• K. 80; Scaift v. F'irrant 
11875), L. R. 10 Ex. 358. The case of a shipowner is dealt with poat, 
\'[). 421, 427 ct s&j. 



The Contract ok Carriauk. 

P hi: 

ciisfoniors' i^cmhIs by lighter from tlio .slii|) to his wur»^- 
houst' (//). It i-< ii i|iicstion ol fact in uucli casf. und a 
person who wliilo iriviti/iu all aiul aiintlry to t'in[)h»y 
hirii, roscrvos to himsolf tlie riulit to reject thcii' otlorrf 
if thev aro. not attractive to him, irrespective of his 
ability or inability to carry the L^oods, is not a common 
farrier (h). 

Dxdts of 'I ('(uninoH Carrier. — lie must carry the ^joods 
of the class ht; professes to ( arrv of anybody who delivers 
thetn to hi'ii. and who oft'ers to pay reasonable hire (/). 
This duty of taking anylxnly's i^oods is that which 
nuikes him a coiiuiion carrier, i.e., a carrier conuiion to 
all. He should carry the uoods by his oitlinaiy route, 
not of necessity the shortest, but witliout unnecessary 
deviation or delay (A') ; and siu)uld deliver them to the 
consi^nee. at the [)lace (if any) designated by the con- 
si^rnor ; unless tlu; consiiznee requires the t^oods to be 
delivered at another place, in which case he may deliver 
them accordini: to the orders of the consii^nee (/) ; and 
if as ])etween the consii;aor and the consignee there 
was a rit^ht in the former to change the destination of 
the goods, the carrier, on receivini; due notice, nmst 
take the goods to the new destination if he carrv 
there [m). .\s a rule, a land carrier should deliver at 

(7) (•(•/Koli/liihfl Tea, etc. tjo. V Oliirr's Wharf, [I'.tlO] 2 K. 15. 

(/() I{(,p,wuik- Co. V. liii.'<hiU. [iStlSj 1 K. H. 210. 

(i) On III V. Bristol and Kx(t(r llnil. Co. (ISC.l), 1 V,. & S. 112, 
.it p. 102. 

{k-) Jiriddoii V. drcit .Xorthtni ll'iil. Co. (I8.51t), 2S L. J. ICs. 51 ; 
Mi/ir.s V. LoiuloH (itul .'<uulh WiHlfni, Hail. Co. (ISTO), L. 11. 5 
C.'P. 1. 

i.l\ London and Xorlh Uistfrn liaU. Co. v. Hny'h'l l\Si\:l\. 7 If. H X. 

(»i) Scolhorn v. .Soiilli ."^I'lfford^hirt liml. Co (IS5:J), 8 Ex 3-11. 

1 '. 

Common Carriurs. 


ilio consij^nee's houao (h) ; a sea carrier, at some place 
ot safety, notice of tlio locality beiui; yiveh by him to 
rhf! parties («). 

'[e cannot bo compelled to take the ^oods if his 
< .uria'^e is alreatly full (o), nor if the ^oods are such as 
lie cannot, or does not profess to convey (jj) ; nor if they 
.ire of a nature such as to subject him to extraordinary 
risk (7). 

A consi'^uor who delivers jj;oods of a dantierous 
i:haracter to a common carrier (although ttie consiunor 
may be ij^norant of the danger) impliedly warrants 
tliat the i^oods are tit to be carried with safety. This 
imphed warranty does not arise in cases wliore the 
c.iinier knows of the danger. Thus, in Bdmford v. 
iroole and Sheffield Transpyrl Co. (r), the defondants, 
who were forwardin*,' a;i;ents, delivered " ferro-siliccm " 
in casks to a common carrier under the descriptitm of 
■' <4eneral carifo," but did not inform him that it was 
ferro-silicon, althouj^h thev were aware ot the tact. The 
terro-silicon during carriage gave off poisonous gases, 
which caused the death of the carrier. Tlie judge found 
<m the evidence that terro-silicon was liable under 
certain conditions to be dangerous, that neither the 
defendants m)r the carrier knew this, and that the 

(n) Cf. Hyde v. Trent and Merscij Xari'/ation Cu. (1873). '> T. R. 

:;.sii, :?07. 

(o) B(itsi»i V. Donovan (1820), 4 H. >fc A., at p. 32. 

(p) But a Mihvay oompany may U- t')iu[H'ilicl to convey, though it 
docs not profess to take the class of L."">ds as a common carrier j'this 
de(X'nds on the Ilailway and Canil Traffic Acts. See pail, pp. 423, 
t/ s<q. 

{q) Edward-^ v. ShtrnUt (1801). 1 Kast, tJ04. 

(r) [i'.tIO] 2 K. 15. !!4. VAtouAN Wiixiams, L.J., did not as.scnt 
to the view that there was an implied warranty, and rested his 
judgment on th. aiuuud that it wan the duty of the defendants to 
communicate such information as they had, and that bv describing 
the goods as " general cargo," they were liable for breach of duty. 



(let«iitliintH wtMo not i^uilty ol iioi^lint'iicf in not knowiui; 
tlio (liiU'^tMous chiiractt'i- of the i^ood.s. The «l»'f«iiuiaiits 
wtMM ht'lil liiibltf ill (Urnii'i'M tor ouiisiu;; the dtnith <>[ the 

(•;ili irr. 

Li'thiliijf for Lois or DiDntKjf. — At rommon hiw, the 
coinmnri carrier must make j^ood uuv loss or tlamui^e 
wht'thtT or no it Ixs eaiiseil by liis nt'Liliirenct'. tor his 
ai,'rt't'iiit!Ut is to carry safelv and securely, imlcss pre- 
vented by tliti act o( God (x) or ot the kiii-'s enemies. 
Au act of God is sonic unforest'en accident occasioned 
by the elementaiy forces of nature unconnected with 
the agency of man or other cause, which cotdd not liave 
Ijeen prevented by the exercise of any foresi-,dit reason- 
ably to be expected of the carrier {t). He is, in fact, 
in the " nature of an insurer " (v). A carrier who — 
thi>Ui.'h not a common carrier -takes j^oods in a siiip 
without limiting his hability by agreement will, in this 
respect, be under the liabilities of a common carrier (u) ; 
with this exception one who carries ;j;oods. not beiui; a 
common carrier, is bound only to carry with due care (x). 
The excepti(»ns to the carrier's liability, whether those 
meationeil above or whether fixed by contract, do not 
avail him if the loss or dama<?e to the ^oods is caused 
by his ne^Ii^ence, or if he do not proviile a pioper 
carria<4e (y). 

He is re.sponsible for the safety of the L^oods so lou;j, 

(s) Fonviird V. PilUird (17s,5). 1 'l'. R. 27. 

(<) Xiiquit V. Sviith (IsTti), 1 ('. r. I). 4-;>. 

(«) ///// V. Srott. L18!»")l 2 Q. H.. at pp. ;{7ti, 7l;{ ; J Com. Cas. 14i' 

(:i) Ciifj'ji V. Bcrnnrd (\-iy.\), 1 Sm. L. C. (12th id.) H>J. 

{>j) T!i, X:!u!ho {!«.H7), 12 App. C:as.. at p 510; .ind =tr ,v,,- 
lioWEv, L.J.. in Sttinmnii d- Co. v. Awjirr Line, [1S!11] 1 O ii.. at 
p. (i24. 

C!oMMo.v Carriers. 


.- thtjy aniia his custody ; /r., duriui,' transit and (a- 
iii-> duty is usuallv to d«livor as well as to carry) after 
rr.iusit for a reasoaablo time, varyin<^ with circum- 
^ranct's. Aftor the lapse of such time ho becomes a 
!uert5 doi)ositeo, and is liable only for uoi^ligence. uidess 
M^h'Twise aj^rood (;). If the consij^uee refuses to take 
rlio '^'oods, the carrier must do what, in all the tircum- 
-itiiuces, is reasonable (o), and may recover expenses 
|Mo[)orly incurred in consequence of the refusal to 
ncept delivery (b). It will be safer for him co srive 
'I >ti«'o of the refusal to the consignor, though this will 
ii)t be always necessary (c). 

V carrier is not liable for ilama^e or loss to jijoods 
uhiili has arisen owin^ to the ne;^lect of the owner. 
vvith(»iit ne^lii^ence on the part of the carrier ; no- is he 
liciblc if the damage arises owing to an inherent vice in 
Ml natural deterioration of the goods delivered to be 
carried {d) ; and if from any cause (e.g., the nature of 
tho goods) special care is rec^uired. the carrier is entitled 
to be informed of this, otherwise he will not be liable 
for damage which but for such cause would not havf 
ixcurred. In Baldwin v. London. Chatham and Dover 
Rail. Co. (e) rags were sent for transit to the company, 
:uid l)y mistake the company failed to send them in 
proper time to their destination ; the rags were packed 
wet. and were in consequence spoilt by the delay, but 

(:) Ptr CoCKBi'KN. C.F., in Chapimtn v. Great Walira Rail. Co. 
(ISSO), 5 Q. V>. U.. at PI). 281, 282; Milchdl v. Luicashin niid 
Yorkshire IMl. Co. (1H75), L. li. 10 y. H. 2oii. 

{a) Crouch v. 'Irtnt H'ts/.r/i. Rail. Co. (1857), 2 H. & N. 41»1 ; 
3 H. & N. 183. 

(b) fircnt North, nt Ituilwiy v. Svnffield (187-1), L. R. 9 Ex. 132. 

(c) Ihution V. linxetidale (1857), 2 H. «S: N. 575. 

(d) Unless, bi-iiu; awaro of tlu- fact-*, he docs not do what is rfasoii- 
abio'to prevent furtlur los> (B'.rl: v. Lvaiu^ (1812), 10 East, 24-4, 247). 

(^) (1882), 9 Q. 15. D. 582. 

M.L. P 




Hi! - f^ 


The Coxtract of C .riage. 

had tluiv been dry, no daiua^e would have boen suffered. 
Tho court d.H-ided that iu the absence of notice of the 
state of th(5 rais to the <'atTiers, tlie conii)anv could not 
be held rc.s|)<»usibl(! to th(* plaintitls for the loss, and that 
nominal daiiia^es would sulKce to meet the dama<,'e 
suffered throuL,'h their default. 

Even ac coninion law it was open to a carrier to 
agree witli his castoiner tiiat his Habilitv should be 
limited. And tliou-h to brin- about the limitation a 
contract was necessarv, a general notice posted up, 
shown to have been M-en by the customer, and to 
have been expivssly or impliedly a-ieed to by him, 
sulHced. Thus, if the owner of the ,^oods received r. 
ticket, on which was a notice limitin^' the liability, this 
would have beeu stroni;, thoui^h not conclusive, evidence 
that he ai^reed to the terms (/). 

The Carriers Ad. 18.30.— By the Carriers Act, 1830 {g), 
It is enacted : (1) That no common carrier by land {g) 
for hire shall be liable for loss or injury to certahi articles 
when the value exceeds £10. unless at time ot delivery 
the value and nature of the p-operty shall have been 
declared, and an increased charge paid or a.-reed to be 
paid (//). Siuh notice nnist be express. Amongst the 
articles meiitione.l are -old, jewellery, watches, neiTotiable 
paper, pictures, chma, iurs, and silk. The amount is 

(/) >^vv the opinion (.f Blackburn. .J., drlivriv,! in Pn I: x \orth 
SiaitoMr. R,nL <'o. (imi), 1.1 H. L. (as., at p. 4-.U ; and ;.;. a to 

._?S,.,). L. 1.. > H. [.. Sc. 4<0 ; It na-n,. v. Jif/nnli (JSK;{). 10 () J5 D 
1/S; h.rluinlson .i Co. v. liownlnr, llsiii] A (' •>|7 • r/nni xr 
Anchor Luu . | litis] A. C. KM > 'J -^. < . -1/ , !• load v. 

(<j) 'ri.i< is .^ppJKMbl,- wli.iv the tniu.<it i.s pull,, by sea, if tho loss 
(/() Section i 

Common Carriers. 


T Liken as that of tlie a^gre^ate value of the parcel. The 
protection extends to cases where the goods are lost by 
the gross negligence of the carrier's servants {i). (2) All 
( amrnon carriers may demand on such packages an 
increased charge, but the amount per scale must be 
iiotiiied in legible characters in some conspicuous part 
'il the ofHce wh^re the paicels are received. Such 
111. t ice will bind those sending goods, whetlier or not it 
. iiu be shown that it was brought to their knowledge {k). 
riu; exemption from the common law liability is given 
uulv where this notification and demand have been 
made (/), or when the declaration oi value has not 
been given. When an extra charge is made, the person 
making payment is entitled to a receipt (m). (3) Other 
;han as provided for by the Act, no public notice shall 
b' allowed to limit the liability of carriers (n). (-4) Special 
contracts are not aii'ected by the statute if their pro- 
visions are inconsistent with the exemption in favour 
of carriers contained in s. 1 of the Act and that pro- 
tection is renounced : but the carrier is not deprived 
of the protection, unless the terms of the special contract 
are inconsistent with the goods having been received by 
him as a conuuon carrier. Accordingly, the contract 
may render the carrier liable for the loss of the articles 
described in the first section beyond the value of £10, 
although their value may not have been declared. 
Special exemptions from liability introduced into the 
contract will not necessarily displace the character of 

(i) Uinlon V. Dibbin (1842), 2 Q. B. OKi. 

{k) Section 2 A ticket containing conditions is not such a notice ; 
but may form tlic basi.s of a sjK'cial contract {Wulktr v. York and 
Xorlh Midland Hail. Co. (1854), 2 E. & H. 7.50). 

(/) dreat Northern Hail. Co. v. Bihrtm (18(i2), 7 H. & N. 950. 

(m) St.'iinpinji is disfH-nsi'd with (s. .'J). 

(n) Section 4. 


■ 1 


The Coxtract of Carriage. 

common carrier (o). (5) A felonious act on tlio part of 
a servant of the carrier, or of a sub-contractor carrvinir 
for him (p), resulting in damage or h)ss to the goods, will 
render the carrier liable notwithstanding any other 
provision of the Act (7). To determine who are included 
under servants, see the section, and Machu v. London 
and South Western Rail. Co. (r), and Stephens v. London 
and South Western Rail. Co. (s). 

The Act applies to a passenger's ordinary personal 
luggage which by the published regulations of a railway 
company ho is entitled to have canied free of charue, so 
if the luggage contains articles over £1(1 in value of the 
kind enumerated in s. 1, the company will not be liable 
for their loss in the absence of a declaration of 
value (t). 

It has been held in many cases that the carrier's 
exemption apphes only in the case where there is 
loss (u) or injury to the goods ; he is therefore liable 
as heretofore for what may be styled consequential 
damage, e.g., damage from delay, circuity of route, 

WTiere the carriei' contracts to cany goods partly 
by land and partly by sea, he cannot claim the protection 

(o) Section ti ; Banndalc v. Ureal Eastern liiiii. ( o. (ISOtO L R 
4Q. B. 244. ^ • '• 

(/)) Machu V. London and ^ontli Wcskrn Sail. Co. (1848), 2 E.\. 

iq) Section 8. 

(r) (184S), 2E.\. 4k-). 

(.s) (1887), IS y. K. J). 121. As to the amount of evidence requirid 
to cause the euurt to infer tliat tlic theft was (■oinniitt(>d by a servant 
of the eairiiT. see Idinjldun v. London- and Xorth ]\'(:.i!( rn Rail. Co. 
(1875), L. H. << K.\. '.«; McQii'-n v. (irait IVt-^lirn Jf<iil. Co. (1875) 
h. R. 10 Q. H. 5ti!l. ' 

(0 Ca>w(ll V. Clufihire. Lin-c/s Coinwittn, [l!.K)7] 'J K. 15. -jy<) ; see 
t'urtlier voit, ]>. 42<i. 

{") Thi^ tii'hid— ,> tvniparary los^ {Mil!,!, v. Draoch iisS;;), lo 
y. B. 1). 142). ' 

Common Carriers. 


i>i the Act if the <;oods are lost, \uiless he can prove that 
rlip loss oocuvved durinii the transit by land (x). 

Limitation of the Liability of Sea-carriers. — This is 
i.idvidod by the Merchant Shippin*;; Act, 1894. This 
>riitute enacts that when loss or danla^e occurs to goods 
without any actiial fault or privity on the part of the 
owner of the ship (y), he is not liable at all in the follow- 
iul; cases : (i) when goods or other things on board are 
Idst or damaged by reason of lire on board the ship (2). 
Where fire has been caused by unseaworthiness of the 
-liip. as by the defective .state of her boilers, the onus 
is u[)on the shipowner to prove that the loss happened 
without his fault, and if the owner knew or had the 
ineans of knowing of the defective condition of the 
boilers, but gave no special instructions and took no 
proper .steps to preveiit injurious consequences arising, 
he will not be entitled to relief from liability («); (ii) when 
gold, silver, diamonds, watches, jewels, or precious 
stones are lost or damaged by reason of any robbery, 
embezzlement, making away with or secreting thereof, 
and when the shipowner or master had not at the time 
of shipment received a written declaration of their true 
nature and vahie (6). 

By s. DOS (c), a shipowner's (y) liability is limited in 

.*) AuMoit ci." Co. V. L. <t- N. ]y. Ry. Co., 11018] 2 K. B. 488, C. A. 

iy) The word " owner " includes any charterer to whom the .«Lip 
is demised (Merchant Shipping Act, 1906, s. 71). 

(s) This includes damage done by smoke, or water used in putting 
cut the tire {The Diamovd, [1906J P. 262). 

(a) Linvard's Currying Co. v. Asiatic Piiroknm Co., [1915] A. C, 

(6) Merchant Shipping Act, 1894, s. 502. This applies only to 
r;iiLi»li .-.(-a-going .-Lips. 

(c) This section applies to foreign as well as British ships. 


The Contract of Carriage, 









iiiN I 


the rases rnentiDiied below if the niisfortuiie lias occurred 
without hi.s actual fault or privity : (i) where any loss 
of life or personal injury is caused to any person being 
carried in the sliip ; (ii) where any daniaue or loss is 
caused to any i^oo is, merchandise, or other thinL's on 
board ; (iii) where any daniaire to person or property 
in or on another vessel, or to the other vessel itself, is 
laused by improper uavi-ation of the ship. The limit 
in resjiect of h)ss of life or personal injury (with or 
without damage to vessels or goods) is an ag.^regato 
amount not exceeding £15 for each ton of the sliip's 
tonnage (>/), and in respect of damage to vessels or 
goods (witli or without loss of life or personal injury) an 
aggre-ate amount not exceeding £8 (e). The limitation 
of lial)ility set by s. 503 of tlie Merchant Shipping Act, 
1894, lias been extended to any loss or damage to 
property or riglits of any kind, whether on land or on 
water, resulting from improper navigation or manage- 
ment of the ship without the actual fault or privity 
of the shipowner (/). If there are claims in respect of 
loss of life and loss of goods, the claims for loss of life 
will be entitled to £7 per ton. and the balance of the 
claims f(.r loss of life and the claims for goods will rank 
equally against the remaining £8 {g). In the event ol 
two unconnected collisions, the owners will be liable to 
pay dama-es up to the statutory limit in each 
case (h). The fault of one part owner does not take 

(d) Sec furtlxr. .Merchant Shipping Act, lilOO, as fo calculation 
«)t tonnage of steninship. 

(e) The Act )>rovide.s for the method of calculating the tonnage 
iijr this purjioni'. 

(/) -Merchiint Shippinsjr (Liability of Shipowners and others) Act, 
llHJO, s. 1. 
('J) Ttie yicioria (1888), 13 P. I). 125. 
{/() -Merchant Shipping Act, 1894, s. 603 (3). 

Common Carriers. 


;i\vav the ^i^ht of another part owner to limit his 
'lahility (i). 

R 'way Comjxinies. — A railway company is not a 
coii).^.,n CiUTiev of passenL:;eiri ; and is liable for damaire 
raused to them only wlien tlie accident is due to the 
ui!L^li'4ence of the company's servants (k). Railway com- 
panies are common carriers only of goods which they 
profess to carry as such (/). But as regards other g«)ods, 
tlicir liabiUty for neglect or default (w) is dealt with 
l.y s. 7 of tlie Railway and Canal Tiailic Act, 1804, which 
provides that every railway companv shall a.'l"ord roason- 
at»lo facilities for receiviug,*forwardiag, and delivering 
trallic. and " shall be liable for the loss of or for any 
injury done to any horses, cattle, or other animals, or 
v> any articles, goods, or things, in the receiving, for- 
Nsai.ling, or delivering thereof, occasioned by the neglect 
or default of such company or its servants («), notwith- 
standing any notice, condition, or declaration made and 
uiven by such comi)any contrary thereto, or in anywise 
limiting such liability, every such notice, condition, or 
declaration being hereby declared to be null and void. ' 
But it is further provided that companies may make 
condition'^ with respect to tiic receiving, forwarding, 
and delivery of any animals, goods, or other things, if 
the court or judge before whom any question relating 

{/) The Oboj (IStli-,). L. R. 1 A. & E. 102. 

ik) S.'f (t.y.) ll'iUvnl V. MIdliiul lltil <:o. (ISO'J), L.^R. 4 Q. B. 

(/) /)i.7;.w/i V. Caal Northern Hail. Co. (1SS7), 1» Q. B, D., at 
p. 185. 

(m) Thtft bv a servant of tlu' company is not per .le ni-sligoncc or 
lirfanlt (Shaw v. drmt Wcdcru Rail. Co., [18'J41 1 Q. B. 373).^ ^_ 

(n) Qua carriers, not wIkti acting in anv uthcr capacity {Ian T'ju 
^J^South Ea.sUrn. Rail Co. (1802), 12 C. B. (n.s.) Ti). 







The Contract of Carriage. 

thereto shall bo tried, considers them just and reasonal)]o. 
And no i,'reater damages may be recovered for the loss 
of or any injury done to the animals beyond the sums 
hereinafter mentioned, e.f/.. for any horse £50 [and s(. 
on], unless the person send in- or deliveiin^' the same 
to such company shall, at the time of delivery, have 
declared them to be respectively of hi<,'her value than 
as above mentioned ; in which case it shall be lawful 
for such company to demand and receive by way of 
compensation for the increased lisk and care theiebv 
occasioned a reasonable percentage upon the excess 
of the value so declared above the respective sums so 
limited as aforesaid, and which shall be paid in addition 
to the ordinary rate of charge ; and such percentage or 
increased rate of charge shall be notified in the manner 
prescribed in the Carriers Act, 1830, and shall be binding 
upon such company in the manner therein menticmed. It 
is further provided that "no special contract between sue h 
company and any other parties respecting the icceiving. 
forwarding, or delivering of any animals, aiticlcs, goods, 
or things as aforesaid shall be binding u])on ov atiect 
any such party unless tJie same be signed by him, or by 
the person delivering such animals, articles, goods, or 
things respectively for carriage: Provided also, that 
nothing herein contained shall alter or aflect the rights, 
privileges or liabilities of any such company luider 
[the Carriers Act, 1830], with respect to articles of the 
description mentioned in tlie said Act." 

All important discussion arose at one time with 
regard to the special contract required by this Act. 
Did writing signed exclude the clause requiring the 
condition to be reasonable, and did a reasonable ror- 
dition exclude the necessity of signature ? The point 

Common Carriers. 


was eventually decided in Peck v. North Stn jf or d shire 
lidil. Co. (o), when the House nt Lord'--, declared that 
rlie condition must be just and reasonable, and embodied 
111 a sii^ned written contract. What is or is not reason- . 
.ible depends, of course, on circumstances ; thus, in one 
case the condition was that " the company would not l)e 
itjspousible for any injury or damage, however caused,"' 
aud this was considered unreasonable, for it would 
jnotect even as:;ainst t^ross nei!,li;j;ence (;>) ; in another, 
It was a condition that the company would not be 
responsible for lut,%fai;e unless fully and properly 
addressed with the owner's name and destination, this 
was held to be unreasonable {q) ; but when the con- 
signor is burdened with a condition which per se is 
unreasonable, and at the same time has the offer of a 
just and reasonable alternative contract, then, if he 
takes the former, he will be bound by it (r). 

Section 7 of the Railway and Canal Traffic Act, 18"J4, 
also applies to goods which the railway company is imder 
no obli<j,ation to carry. Thus, an agreemenc to allow 
i'(jmmercial travellers to take samples by passenger 
train, free of charge, on condition that the company 
should be relieved from all liability for loss, is not binding 
in the absence of a signed contract. The condition 
is void and the company must make good any 
loss {s). 

By the Regulation of Railways Act, 1868, s. 14, it is 




18 Q. 


(1803), 10 H. L. Cas. 473. 

McManiis v. Lancashire, dc. Roil. Co. (1859), 4 H. & N. .S27. 

Cutler V. Xorth London Bail. Co. (1882), 19 Q. B. D. C4 ; and 

ickdou V. Great Northern Rail. Co., and the cast'3 there cited, 

B. D. 176. 

Grcal Wcitrm Rail. Co. v. M-Carihy (18S7\ 12 App. Caa. 218. 

WilkvMon V. LancaMre and Yorkshire Rail. Co., [1907] 2 K. B. 



The Contract of Carriage 

} I 

eiiactud that where a compaiiy. by thr()U<:li bookin;j;, 
toutracts H) cany any animals, luu'ia^e, or ijoods from 
phieo tit phae, paitlv" by railway and j)artly by sea. c 
. partly by canal ami partly bv .sea. a c(>nditi<»n exeniptinij 
the company trnm liability iov any loss ur damage 
arising iruni the act ul God. the kini;'s eueniies, fire, 
accidents Intm machinerv. boilers, and steam, and all 
anil evei\' other danuei^ and acciilents of the .^eas. 
rivers, and navi;iation. shall be uood, and shall be con- 
sidered to be incorporated in the contract, it printed 
lei^ibly on tlie receipt or irei'.;lit note, and pnblished in a 
conspicuous position in the bookiu^-oifice. 

Railway (-onipauics nnist forward floods vithont 
delay or partialitv, and cannot nive preferential rates 
so as to hau'licat) any other company or persona. 
Powers are given by the Railway and Canal Tralfic 
Acts, 1873 and 1888. to a commission, to hear com- 
plaints, and to make such orders as may, under the 
circumstances, be riij,ht. 

.V railway company ai)pears to be a common earlier 
oi a pas.>,enL'er"s personal luL'.uaLje, and therefore an 
insurer ol its safety ((). But this is not so if the luggage 
has been taken by the passcn;':er out of the control of 
the company. The company's porters frequently take 
charge oi hiiigage, and the difficidty is to know when 
the\- are so acting; as aiients of the company, and when 
of the ]>assenuer. Tlie luggage is deemed not to be in 
the company's possession if it be given to a porter an 
imreasonablo time before the train starts ; nor if a 
reasonable time has elapsed since the passenger arrived 

(0 Great U'rstrrn Rail. Cu. v. Uuitch I'iSSS), 13 AiJp. Gis. 31 ; 
am' sec Ukhards v London, Brighton, tic. Rail. Co {184»), 7 C. B. 
S3"J ; aud seo aiUe, p. 4_'i». 

S; I 

TuE Contract of Affreightment. 


,it liiti journey's end and the lugi^a^o was placed at his 
• ii.sposal (a). 

I'uijhts of the Carrier. — Tl.iese are to have tlie j^'ood^ 
'It'livered to hiia, and to have his remuneration paid. 
ihi- ])ayment mu^t be reasonable, but at common law 
!t need not be uniform. He may claim it in advance, 
i.e.: before he carries, but not before he receives the 
'^oods (x). The carrier has a lien for his cliarfnes on 
tlio goods carried in res[)ect of which the claim arises. 
itiit it is a particular and not a general lien (?/). 

TiiK Contract of Affreightment. 

This contract has f<jr its object the carriage oi goods 
ill vessels for a price called "freight." It is found in 
two forms : (i) Charter-party ; (ii) The contract for 
the conveyance of goods in a general ship, which 
i-iiutract is embodied in a bill ol lading {ijij). These two 
contracts have many incidents in coumion. Sometimes 
a cliarter-party and bills of lading co-exist, especially 
where the charterer may desie to have an opportunity 
')t assigning the goods wliilst they are still in course of 
carriage. Sometimes the ciiarterer {i.e., the person 
who hires tlu- siiip from the shipowner) uses the ship 
as a general sliip, carrying goods of third parties under 
l)ills of lading. Tlie terms of the contract of carriage 
arc, as between the shipowners and iiie chartere)-, 
usually to be gatliered from the charter-party, and 
wliere there is a bill of lading as well, its primary use 
(as between these parties) is simply to serve as a receipt 

(n) Hodgkin^jii v. London and North Weslern Rail. Vo. (1885>, 
I i Q. l{. D. 228. 

(r) Pirk-ford v. arnnd Junciion Rail. Co. {1S41), S M. & W. 372. 
((/) liushworth v. Hadjkld (1805). 6 East, 519 ; 7 East, 224. 
(yy) Sou^furthcr as to bill of lading, po^it, p. 439. 



i! . 


;i»i till! l,imh1s >;lii|)|)(>(l (III iMiaid uiid<'r tlu- contract as 
' outiiiiuMl in tlit> rluuti'i-paity. As i»';4jmls assiunees 
"t tin- bill (if Iiulin:.', tho bill of ladiu;,' contains the 
teiMis of tilt! contract of caiiiu'.'o made with the ship- 
owners, and unless th(! bill of ladini,' refers to and 
incoii>orat»'s with its(!lf any or all of the terms of the 
rliartor-paity. tht' ussi-nee is not ailccted by the 
. harter-party (;). Tim-, if the bill of hidiiiL^ contains 
a statement, " ficiulit" and all other cmiditions a^ per 
eharter-party,"" the terms of the charter-party govern 
rhe payment of frei<.'ht and all other conditions which 
would have to be performed by the receiver of the 
;:o<His. so far as these are not in ((.iillict with an\- 
express stii)ulati(»ns of the bill of hulin;.' : but con- 
ditions of the charter-paity are not incorporated which 
do not, concern the consiunoe, so the shipowner will be 
liable to the assi^^'nee of a iiill of ladin^^ for dama;:e to 
a car-o carried on deck, although under the chartcr- 
{larty it was so carried at mercliant's ri^k ('/). 


riiis is ■' an ai^reement by which a shipowner agrees 
to ^ lace an entire sliip, or a part oi it, at the disposal ot 
a merchant for the conveyance of ^oods, binding the 
shipowner to transport them to a particular place, for 
a sum of money, which tlie merchant undertakes to 
pay as frei-^ht for their carriage " (6). The person whose 
goods are to be taken is called the charterer. 

TliO charter-party may, but need not, be under seal, 

^:) Sw p,r KsHtK, .M.K., and Uowen, L.J., in OrUitlul Sleanh-lup 
LO. V. T>jlor, [iSDIi] 2 g. U., at jip. 521, 520. 

i,a) Strraino v. CainpljilL [Isulj 1 Q. IS. 2s;j ; Died^rich^tn v. 
iarquliUiMih, [iSitS] 1 Q. !',. i:,() ; 3 Com. Cat;, bl. 

\t') MaiKlc ami PollotU on Shipping (-Itii ed. !, p. 289. 



i)iil must be Htampcd (c). It may ainoiint t<» a complete 
li'^mise of the ship ; tliat is ti< say, it may put tho v«'..sel 
altit^ethcr out ol the power and control of the owner, 
iiiid vest that power and control in the charterer. 6'> 
'hat duriii;^ th<' hiring,' the ship is to be regardtd as the 
\.*>-;ol of tlie cliiirterer and not of the owner (rf) ; but 
u'licrally, th») ship remains in the possession <>l tin' 
owiiiM, tlie charterer acqiiirint.' the riiiht only to put 
tn> 'j;oods on the vessel, and to have them carried (f). 
riio (jucstion is one of construction. 

The foUowini,' form (/) will show the stipulation-i 
onliuarily inserted ; 

'■ It is this dav mutually ajiiecd between Mist.-. [.I. />'.]. 
agents for owiars of tlie good ship or vchscI called [T/u 
■fames Scvtt], Al, and newly cn|)j)ered of, etc., of the huideii 
of 340 tons {'j) regiate; nieasureiuent or thereabouts, whereof 
[C. D.] is master, now at {Mutia] (1), and Messrs. [A. /■ 
of Liniji"ori merchants, that the said ship being tig.. 
staunch, and stronir, and every way litted for the voyagv 
(2). shall Willi all convenient speed proceed to London (h) 
and thoic load (3) in the usual and customary manner 
a full and complete cargo (4) of lawful merchandise [eai/ 
about 4(X.i tima in vtiijhl], and therewith ])roceed to [IJotig 
Kong or Shaiigliai] as ordered before sailuig, or so near 
thereunto as she may safely get (o), and there deliver the 
same in the usual manner (6) agreeably to bilb of ladii\g ; 
after which she shall load there, or if required proceed 
to one other safe port [in China] and there load alway.s 
afloat (7) in the usual and customary manner from 
the agents of the Siiid charterers a full and complete cargo 

(e) Stamp Act, 1891, 8s. 49—51, and Sched. I. 

id) Lord Herschell in Baumwoll, etc. v. Furness, [1893] A. C, 
at p. 14. 

(.) Sandemati v. Scurr (1867), L. R. 2 Q. B. 86, 96. 

( / ) CATtain trades have forms peculiar to themselves. 

ig) This should not be omitted, but a boni'i fido mistake in it will 
mil viliule the coutract, unless it be shown that under the circum- 
stances the error is very considerable and material. 

(h) As to the effect of deviation, see jmst, p. 438. 

430 TllK (oNTKAt I <>i Al KRKKiHTMKNT. 

of U'A or otliiT lii\Uiil iiHT('li.'iii(liM>, not fXL't*f(iirii{ wliat 
'•\iv ciiii rcd^Kiiiiihly stow ami larry oviT ami nlxivf liiT 
tai klc. Jippairl, piovixion^ iiikI fninitiirc ( Ji. tin- ('arv[o«s 
III iiij: liioui^lit to ainl taken from iildii^.'-itlf" tli(< vessel at 
tlK> eliarteni:< risk and exiwime. ulneii tlic saiil nun liaiitM 
liiml tlieniMelveH to Hliip, ami l.einf so loaded .siiall there 
with proceed to [LinriMHil nr L"iitliiii\ as ordered on si(iiiinjj 
liills of iadini{ aliroful, or so near thereto an she may safely 
net (.">). and there the same in the usual and 
cnstoiiiary manner (<)) to the said rharterers or their 
assigns, they payLniJ freight for tho same at tlie rate of 
f£7 lo.v. jiir Ion of ji flit i-iilnr flit] for tea delivered, for 
the rouml out and home; a deduction of \'>s. pi r tui,] lo 
he made if sliip h" discharnetl and loaded at [Il"iiij A'"//7[, 
other gootls, it shijiped. tu pay in custom, y proportion ; 
in consideration wl.oreof liie out w aid car;.'u to ht; carrie<l 
freight free; payment whereof to liecome dui' and he 
made as follows: lllun fnlliiir ^/■*/l.^J. Sliip i~ to have 
liherly to put on hoard .S(( tons of \ ], or other dea*! 

wiiL'hts, and to retain it on hoard during the voyaiiTc. 
Thirty running days (Sundays and holidays excepted) are 
to he allowed the said mercliaiit if the ship is not sooner 
<iisj)at< hed for loading in [London], and forty-tive like 
days (S) for all purposes ahioad. and ten days on demurrage 
(8) over and nhove tlic saiil lay days and the tine herein 
stated, at |£1() Stirling ptr day], paying day hy day as the 
same shall become (hie. The time occupied in ehanginii 
ports not to count as lay days. Charterers" liability under 
this charter-party to cease on the carjo being loadtd, the 
ma-ster and owners having a lien on eargo for freight and 
demurrage (',»). Tlie master to -ign bills of ladiny at such 
rates of freight (10) as may be required by the au( ids of the 
charterers, without prejudice to this cliarter-party. 

"The act of God, the King's enemies, restraint of 
princes and rulers, fire, and all and every other dangers 
and aecident.s of the seas, rivers, and navigation, of what 
nature and kind soever, throughout the voyage, being 
excepted (11). 

" The vessel to be consigned to charterers" agent abroad, 
free of commission. (*n the return of the ship to [Lireri)ofir\, 
she shall be addressed to [G. H ct- Co.] brokers or to their 



.i^ciitu, Bi any other port of diwharup. I'cnalty for non- 
|)orfornianoo of thia aKrcenient. the eatimi tfd amount of 

^'ot«'s on the Form nf ('hnrler-j)'irtif. 

The chnxes of the nbore rmvj be more ihlrUi;iiilc ij 
read with the aid of the follou-ing notes : 

(1) " Nnu- at," efe.-- -This is nn important statntiient : 
there is, it will ''♦' observed, no .stipulutiou as to the 
• iinc when the ship shall bo handi'il over to the ( harterer. 
i)iit if he knows wlieie the ship is at the date of the 
. hiirter-paitv. he can tell approximately when it will 
be at his disposal at the a-.'ieed place. F<ir this reason 
the statement in reference to the place of the ship is 
generally construed s\r i '-ondition precedent, the falsity 
of wliich entitles the c' rterer to rescind (/). 

(2) and fitness to receive car^^o are 
implied terms. The shipowner when he enters into 
a charter-party impliedly warrants that the ship is 
tit to encounter the ordinary perils of navigation and 
to carrv the cariio (k). These implied conditions extend 
respectively only to vseaworthiness at the time of sailinji, 
and to fitness at the time of loading', and they do not 
continue in force after the ship has .^ailed or the j/oods 
are once on board {Ic). But if a voyaiic is of necessity 
divided into staires, e.g.. to take in coal, tiie vessel 
must be made seaworthy at the commencement of 
each sta<ie (»h). If the ship is unseawortliy at the 
c»)mmenceme»it of tlie voyage, the sliipowner, alth(iUf;h 
liable for damaue to carij;o cau.sed directly as the result 

(i) BerU-Kn v. Tnijhr d,- ^oii^; [lS93] 2 Q. B. 274. 
ik) Steel V. Slate Line Steam-'<hii) Co. (1878). 3 App. Cas. 72; 
Mr.Faddtn v Blue Star Livf, [HR»r.]'l K. B. «'J7. 
(wi) The Vortigern, [I8i»«] P. 140 ; 4 Com. Cas. 152. 

}. ! 




iM > 



Tin: ('oxTRACi ui 

(if tliat unsea\vorthiue6>. is uot liable for daina.L;*-. caused 
1>\' a peril of tho sou excepted iti tlio liill of ladiii'.'. The 
contract of aflreiiihtment i.s not displac(<d hv the slii])- 
owiier's lircach of wanaiity of seaAvortliiness. and tlie 
-hipowner is not thereby nduced to the jxtsition of a 
coinmon carrier (/(). Other inijilied condition.^ are 
(i) that the voyai;*' will be comnieiiced and carried ont 
without iiineasdnalile delay; anrl (ii) that there sliall 
be no unueces>aiv deviation. These ublii;ations impose 
a dutv on t!i(^ sliipowner not to expose the ship to 
unneccssaiy risk. Thus. \vher<^ an owner caielesslv 
allowed uoods destined for an alien eneioy to be loaded 
with of th<; jdaintitf and as a result the ship was 
seized and detained by the naval authorities, the owner 
was held liable for the ( <inse(juent delay in tleliveiv of 
tJK' pluiiititt's uoods (o). 

(3) The owner must briiiu his ship to the aureed or 
usual place of loading at the poit where the vova^e is 
to commence, unless the charter makes j)rovision other- 
wise ; ihe charterer, when he has notice that the 
ship is repdy t(» load, biiun his ^oods alongside the ship 
at such place, and deliver them to the servants of the 
shipowner (;?). In the absence of expiess stipulation in 
the cltarter-party. the charterer is liable for not pro- 
ducini,' a car,!j,o, though he be not personally in faidt in 
failing to do so {q). As a rule, the sliipowner is responsible 
for proper stowage (r). but the exceptions are numerous. 

[tl) The Europa, [1908] P. 84. The position of the ^liipowTaer is 
iliti't n nt wlicn hr coiiiinit.^ a breach of the undirfaking not to deviate. 
.See j>o-9t, p. 4:!8. 

(o) Dunn v. IhirLnall n,o^., [1902] 2 K. B. CI-1 ; 7 Com. Cas. o3. 

ip) Per Selbormi;, L.( ., in Grant v. CoverdaU (1884), 9 App. 
('as., at p. 475. 

('/) Grant v. Corcrdule. ■■<ii)»'i. is a srood cxami)le. 

(r) JJlaihe v. ^Vo/i/int/y. (18:«9), ti'c. B. (n.S.) 894. 



(i) But for this provision, a shipowner paid at a rate 
per ton of the car^fo, niijilit find tliat owin^ to waste of 
-pace his freij^ht has not come np to what he had cou- 
Tr-iaplated. If the ship is described in the earlier part 

■ '1 the document as " of tlio burden of 310 tons measure- 

■ uMit or thereabouts."' and the words " full and coniph^te 
raruo " arc nnqualilii'd. the cliarterer docs not fulfil his 

'bliuation by j)uttiii'j en board a car^o of 340 tons, if in 
lart the ship will take more ; nor docs he make him.self 
ii I'lle by puttinii' h^ss tlum 340 tons on board if she 
(■a!i!iot take that f[uantity (.s-). Sometimes the charter- 
party runs thus : " a full and complete cargo, say 
! about 1.100] tons " ; in such a case the cliarterer is not 
bound to load the ship up to her actual capacity, but his 
"plication will be satisfied if he loads to about three 
i)'M' cent, in excess of the 1,100 tons, though the ship's 
(■a})acity is over 1,200 tons (t). But the word " cargo '" 
alone, in the absence of an\thing in the diarter-party 
to qualify it, means the entire load of the vessel, and 
tlierefore the omis-sion of the words " full and complete " 
are often immaterial {v). On the other hand, subject 
to the stipulations of the charter-party, it is an implied 
condition that the shipowner shall not the ship in 
a manner prejudicial to the charterer, e.p., he cannot 
load bunker C(tal intended for a futuie voyage so as 

(■':) HunU.r v. Fni (1S1".»). - 1^- --^ AM. 421 ; Morris v. Ler!»on 
'1S70), 1 C. P. U. 155. 

it) Morris v. Levison. mpr'i . cf Milkr v. Bormr, [1900] 1 C^. B. 
(lltl : 4 ("om. Cas. 175, where the eharterer contracti'd only to load a 
••(urgi) uf ore, say about 2.S00 tons,"" not a ''full and conii)let-e 

I") Borrow.naik v. Drayton (1S77), 2 Ex. D. 15; Jardiiie Mathe- 
■'On it- Co. V. Cli/d, Shippiwj Co., [I'JIO] 1 K. B. 027 ; cf. Milkr v. 
lijrufir, [1900] 1 Q. B. 691, wheP' on the construction of the particular 
eluirter-party the omission of tl'.e word-: " full and complet" '" waa 
lield to be material. 

r i 


i * 

t' t II- 


434 The Coxtract of Affrkightment. 

to prevent the charterer huviuir full advantaue of the 
ship {x). 

(5) The shipowner cannot usually compel the con- 
sign,.,, to take delivery until the ship has reached the 
place named, but it may be that she cannot safelv reach 
it. These words, " as near thereunto as she can safely 
lict," enable him to den.and that the car.uo be unloaded 
before arriving at the named place, if she is prevented 
from uettin- there by some permanent obstacle which 
cannot be overcome by the shipowner within .such time 
as accordinu to all tiie circumstances of the case mav 
reas(ina])ly be allowed (y). 

(*'•) " The liability of the shipowner as to the com- 
mencement of the unloadinji is to Mm all reasonable 
dispatch to brin- the ship to the named i)lace wliere the 
carrying voyage is to end, unless prevented bv excepted 
perils, and when the ship is there arrived, to liave her 
ready with all reasonable dispatch to dischar-e in the 
usual or stipulated manner " {.). The consi::uee or 
charterer nuist take the car^o from alongside, and for 
that purpose jirovide the proper appliances ir,r takiu.' 
delivery there {a) ; the shipowner should put the car-o 
on the rail ol the ship, and in such a i)osition that the 
consignee can take it. If tiie owner of -oods imported 
in any ship from foiei.un parts fails to land or take 
delivery of the same, at the time a.^reed (or if no 
time is a-reed, within seventy-two hours, exclusive of a, 
Sunday or Imliday), from the time of the report (//) >,[ 

(y) Brett. L.J., in Xd.on v. Dahl (1&79). 12 Ch. I)., af ,. r.'t" 
(;) Brett, L.J.. in Xd.son v. Ihthl supra, at p 584 ' ' ' • 

(a) Dnhl V. NeUon, per Lord Blackburn (1881), (j Ai>p. Cas , at 

(b) I (.. tli<' rtport rcqiiind bv flu- Customs laws. 



the ship, the shipowner may land or unship the <ioods 
and place them at certain places according; to circum- 
stances. The shipowner may, by giving written notice 
t(» the per.son in whose custody the ^oods are placed, 
lotain his lien for frei^dit on the same, and then, subject 
to certain conditions, the person with whom tiie <>;oods 
are deposited may. and if required by the shij)()wner 
sliall, if the lien is not dischari,'ed as provided by the 
Merchant Shippin^r Act, 1891, at the expiration of ninety 
Javs from the time when the uoods were placed in his 
cust^(l^• (or earlier if they are perisliable). sell by public 
auctio 1 sufficient of the goods to satisfy the Customs 
dues, ihe expenses, and the freight (c). 

(7) "Always afloai" means that the ship shall be 
sent to a port in which she can safely lie with her full 
car<io without touching the ground. If to the know- 
ledge of the shipowner, owing to the state of the tides, 
there may not be sufficient depth of water for the ship 
to load always afloat, the charterer will not be responsible 
for delay thereby occasioned (d). 

(8) " Demurrage " properly signifies the agreed 
additional payment (generally per day) for an allowed 
detention of the ship, whilst loading or uiihjading, 
beyond a period specified in or to be collected from tlie 
charter-party ; it also means compensation by way of 
tinliquidateci damages for undtie detention not provided 
for specially in the instrument (e). The former is the 
strict meaning. The freighter who agrees to pay 

(c) Merchant Shipping Act, 1894, ss. 492—501. „^ ^, . „ 

\d) Carlton Sknm-fhip Co. v. CoMe Mail Piickds Co., [1898] A. (.. 
48(1 : 2 Com. ('as. 281). 
;e) Bow EN, L.J., in Clink v. Uadford, [[mi] 1 Q. B., at p. t)30. 

— ■ 

p ll 




The Contract or Affreightment. 

(lemurrau'e f(ir detention boyund the lav days will have 
ti) pay so lonL,' as tii(^ ship is in such a condition that 
she cannot ha handed back to the use of the sliipowner, 
thougli the delay be not caused by the freighter's 
default ( f ). If no lay days are mentioned, the charterer 
is liable to pay damages if he detains the ship beyond 
what, in the actual circumstances, is a reasonable 
time (^r). But in either case, if the delay is due to the 
default of the owner or of tlioso for whom the owner is 
responsible, the ciiarteier is not liabl j to pay (/). Tlie 
lay days. i.e.. the days allowed for loading or unloading, 
begin wh<Mi the sliip arrives at the place agieed uoon 
in the charter-party, and the charterer has notice tliat 
she is leady to load or unload ; they run continuouslv, 
each day being counted from midnight to midnight, 
and not periods of twenty-four hours (/t). It the 
vessel is not discharged within the lay days, a i)art of 
a day counts as a whole day (i) ; but where the charterer 
is bound to load at a ceitaiu rate " per weather-workin" 
day," and bad weather jirevents work, any time less 
than half a day will not count as more than half a 
day (k). After the lay days have expired, demurrage 
becomes payable at the rate provided by the charter, 
or if the charter does not apply, as unliquidated 

(9) This clause is styled the cesser clause, and it 
puts an end to the charterer's liability when the cargo 
is loaded, the shipowner relying on his lien in -order to 

if) Esn£R, M.R., in Budgeil v. Bmninglon, [1891] 1 Q. B. 38. 

((/) Ukk V. Rodvmnuchi, [1891] 2 Q. B. 626 ; [1893] A. 0. 22. 

(//) The K'ltij, \\hj7>] P. r.ti. 

(?j Commtrcial Steaw ' ip Co. v. Boullon (1875), L. R. ll) U. B 

(i) Ijiarickelou.' Stcanishiji '~'o. v. Luinpor' and Iloit, fiSOT] i Q B 
670 ; 2 Cora. Cas. 89. 



ict paviueut. Unless obviously contrary to the inten- 
tion of the parties, the c(Hirt so construed it that the 
-xoueration of the charterer and the acquisition of 
the riiiht of lien may be co-extensive ; in other words, 
the cesser clause does not aiiect liabilities in respect of 
which the shipowner cannot secure himself bv the 
Hxercise of the ritzht of lien (1). 

(10^ Freight is dealt with heieafter. See post, 
jip. i-il it scq. 

(11) The effect of this clause is to exonerate the ship- 
owner from liability for loss occasioned by the causes 
enumerated in it, if it was not due to nesjiliuence on the 
part of the shipowner or of those for whom he is 
responsible (m). If the ship is unseaworthy when she 
starts and damage results, the excepted perils clause 
will not save the shipowner from responsibility for 
dama;4e (m). 

•' The act of God " has already been defined. See 
(inlc, \). 41G. 

" King's enemies "' ; this exception appHes only to 
foreign enemies, and not to traitors, pirates, robbers, 
etc. (o). 

•' Restraints of prince^ and rulers '" ; e.g., blockades, 

embargoes {p). 

•' Perils [dangers anil accidents] of the seas " ; damage 
caused by the sea, storms, collisions, etc., of an unex- 
pected nature ; thus, damage caused by sea-water 
entering through a hole eaten by rats is an excepted 

(/) Clinic V. Radford, [1891] 1 Q. B. G25 ; Uamen v. Uarrold, 
1 lfe941 1 Q. B. «12. 

{m) See The Xantlio (1887), 12 App. C'as. 603 ; HamiUon v PandorJ 
(1887), 12 App. Cas. 518. 

(u) Gilroy v. Price, [189:1] A. C. 50. 

(o) Forward v. Pittnrd (1765). 1 T. K. 27, 31. 

ip) See ante, p. ;>S9' 



p-'i-il, but diroct injury to the cargo by rats is 
not iq). 

The excepted perils clause frequently ('(tutain.s many 
matters other tlian tliose mentioned in the charter-party 
above, viz. : "• ])iratt;s, robbers, or tliieves " [which 
does not apply to thefts committed by persons in the 
service of the ship (r)J. " barratry of master or 
marines," " ue^li^ence o: master and mariners," 

" jettison,'" and so oji. 

Ihrialicn. — Voluntary or unwarranted deviation may 
render the contraci of alfreiuhtment void, so that 
the special contract 'tv charter-party is displaced as 
from the be^inniu;.' of !he vova^e. no matter when or 
where the deviati(Ui to.k place, and the shipowner 
cannot rely on the excepted perils clause, although the 
loss or damage to car^o cannot be traced to the 
deviation (a) ; and whei-e during an unwarranted 
deviati(m a ship was torpedoed by a German submarine, 
it was iield that the shipowners, as carriers, could not 
rely ou the common law exception that the loss was 
caused by the king's enemies (/). But the contract of 
alfreightment will not be a\-oided by deviatit)U necessary 
for tlio safety of the ship or crew, although the necessity 
was caused by imseaworthiness, and that unseaworthi- 
ness was due to some cul])alle act on the part of the 
master. If the ship is in peril the master is not faced 
by the alternative of choosiim between the safetv of 

{'I) ll'imilton \. Faiidorf{\H^-), I J A|)[.. Ca.-. olS. 

(r) S'.cinnuui .1 Co. v. Angi^r LitiL, Limilcd, [IS'Jl] ] Q. B. Ol'J. 

(.s) Joseph Thorley v. Orchi< S.S. Co., [1907] 1 K. B. 6(iO. 

(0 Jamci Morrison d: Co. v. .Shaw, Savill cfc ^o., [191 til 2 K. B. 

Bill of Lading. 


lii-5 ship and crew and the loss ot the contract of affreight- 
ment {u). 

\ chartor-partv, like any otiier contract, is governed 
ii\ its cDiistriutidn l)y ordinary rules of law ; if tliere 
i< a latent ambiguity, evidence i- u<lmissible to show in 
.vhat sense it was used, and it any words used have a 
teeiinical uieauing, then evidence is also admissible 
to show the meaning in which the wo'ds were used. 
The contract by charter-party is to be construed in 
:i liberal way, the written parts of a partl\'-printed 
document being, as a rule, pre erred to the printed 
•(luit, so as to got as neai' as may be to the exact intention 
')f the paities. 

Bill of Lading. 

A bill of lading is a document acknowledging the 
shipment of goods, and containing tlie terms and con- 
ditions upon which it has been agreed that they are to 
be carried (x). It is excellent evidence of the contract 
for the carriaiic of goods on a general ship, i.e., a siiip 
which is used for the carriage of the goods of several 
merchants who may desire to have them conveyed by 
her. and wliich is not employed for the carriage of a 
chaiterer's goods only. A bill of lading is generally 
used, even when tlie siup is chartered. If the charterer: 
finds the cargo himself, the bill of lading is usualh , but 
not always, a mere receipt f(n- the goods given b_v the 
master. If the charterer takes the goods of others, the 
bill of ladini' contains the contract he makes with 

(«) Kifih V. Taylor, [li»121 A. C. GO-t. Aa to tho t ffi-ct of a breach 
of warrantv of soaworthincs:, on thu contract of carriago, soe nntt, 
pp. «1, 4:{2. 

(x) Caldu'dl V B'j7/{I7So). 1 T. R. 21».. 





1 i 

1 1 


riii: ruMKALl i>V Al tRKIUHTMEXT. 

m III 


tlmm i/j). The tmia ..i a bill ..i liuiinu varies imu h 
accordinu' t(» the pnutice ..f tli.* parties thereto, but a 
u.siial fi)rm i> as inilnws ; 

■ >in[)l)ed ill good oiiUr and tdiulitioii Ijy 
ill and iiiiciii till' good .ship Cidltd tlif • Jtritisli Tar," whciu't 
is master for tins pusfnt \o\:vj,i-, and now in 
the port of , and bound for ' , with libfitv 

to rail at any jxirts on tlio way for (.■oalinj; or otlu-r noce.s.sai v 
puiposoH, lifty casks of wine h.inu marked and numbered 
as per marmn. and to be delivenil in the hke ;iood o-der an<i 
'diidition at tlie aforesaid jiort of , the act of (iod. 

tho King's enemies, tiro, barialiy of the mastiT and erew. 
and all and every other daiigns and accidents of the seas, 
livers, and navigation i.f wluitcvcr kind uv natiire <of\fv 
excepted, unto or to his assigns, he or they juiyinL' 

freigiit for the said goods t per ton. de!i\('red with 

primage and average aciustoined. la uitness wliereof. 
the master of tin sai.l sliip hath altlrmed to bills ol 

lading all of this tenor and dale, one of uliich bills being 
acconii)lished. the others to stand void. 

•• I>ated, etc. 

■■ Weight, value, and couiciit-^ unknown.' 

A bill of ladini^ tor goods to bo expoited or carried 
coa^^twise must benr a sfatiip value sixpence, wLich 
must be impressed before oxocLiti.u (z). A bill of lading 
for goi ;s shipped abroad need not be stamped. 

Many matters already mentioned in connection wirii 
chartor-partios apply equally to bills of lading. Seveial 
of these are mentioned in the notes to the form ..f 
charter-party given above {a). There is, however, this 
difference : a shipowner, whe.. the contract is contiiined 
in a charter-party, may have duties to perform before 
the time of shipment of the goods ; this is not so often 

j) See ante, pp. 427, 128. (;) Stamp Act, 1891, s. 4U. 

(«) Anlc, [.p. I.ij tt seq. 

Bill or Lading. 


'lit! caso wlion tlie contraft is ovideneod l)y a hill nf 
liidinii only. 

The bill (»f ladini; is .si;:ued f:cneially by the master, 
thouirli in practice, whtne the uoods are shipped, the 
acknowledgment liist ^^ivcii is a less iormal receipt 
[" nuites receipt"), which is afterwards exchanged for 
a bill of ladin;; signed by the master : but there is 
uothiuu to prevent the jjivinu, of a bill of lading; withont 
production of the mate's receipt, if the goods are on 
i)oard, and if thtne is no interest in them known to the 
master except that of the shii)per {b). The sjiipowner 
is justified in dolivering bills of lading to the holder 
I if the mate's receipt if h<! lias not notice of other 
claims (c). If the mate's receipts and the bills of lading 
i;et into dilierent hands the goods must be delivered to 
the holder of the bill (d). 

The master, when he signs, affixes his signature as 
agent of the owners of the vessel ; except that when a 
vessel has been chartered, and the charterers put up 
the vessel as a general ship, then the master may be 
agent of the charterer and not of the owner, the 
decision in each case depending upon the facts. If the 
ship has been demised (>•) to the charterer, the master 
is generally the charterer's agent (/), but the mere fact 
that the charter-party provides that the master shall be 
the agent of the charterer does not of itself bind those 
who deal with the ship without actual notice of this 
1 lause (f/). The law on this subject may l"^ stated in 

{h) Hullming v. Luing (1874), L. R. 17 Ea. !'2 

ic) Evan v. Nkhol (1842), 3 M. & G. 014. 

(d) BaumxL-oU, (fc. v. Furm^a, [1893] A. C. 8. 

(c) See mUe, p. 429. 

(/) BaUmuoil, l(£. \. FurntsS, [1SP3] A. (,'., ;it Ji. 1 !. 

ig) Mancheder Trust v. Furncss, [1805] 2 Q. B. 639; 1 Com. 
Cas. ;{9. 




tilt! \vf)rils ol CocKiiiiiN-, ('..).. in Sandcttunt v. Scurr (li) : 
wliort^ u [Kiitv iillows jiimtln'r to appear betoio the 
\\iiil<i as Ills au't'nt in any i^ivt'u capacitv, lie must be 
liiil)!"' to any |>art\ wlm cimtrarts with hucIi apparent 
U'ient in a matter within th<' >(<ip(! of s\i(h ai;eucv. 
The master nt a vessel has 1)\ law aiitiioritv to sv^n 
bills (»!' ladin- on behalf ot jiis owners. A person 
shippiaj, 'U) (is on Ixmid u vessel, iniawarc; that the 
vessel has t»oen chartered to another, is warranted in 
assuming that tiie miiste'- is a«'tinu b\' viitue of his 
ordinarv aiitliority, and therefore actiii'j, lor his owneit> 
is si'^'nini; bills of ladiim. It ma\- be that, as between 
tiio owner, the master, ami tin; chartere!'. the authority 
of the master is to si-n bills of ladim,' on bc^half of the 
charterer oidy, atid not ol tiie owner. But, in our 
judgment, this aittn-ed state of the master's authority 
will not atl'ect the lial)ility ui tlie owner, whose servant 
the ma.-.ter still remains, clotlied with a character to 
which tlie authority to bind his ownei' by siumnL.^ bills 
of ladiu'4 attaches by virt\ie of his ollice. We think 
that until tiie fart that the master's authoiity has been 
put an end to is brouuht to the knowledge of a shi])per 
of L,MO(ls. the latter lias a ri-ht to look to the owner as 
tuo principal with Vv'hom his contract has been nuule.'" 
Tluis. wiieie chart er(!rs put np a vessel as a general 
ship, and piaintilT put on boai'd wine, and receiveil Itills 
of ladin : in ordinary foiin signed by tiie master, the 
owners were; h(;ld liable for loss bv leakage arising from 
impropt-r stowa;_'e, it bein;.; (piestione.(l whether an action 
would not lie, also against the charterers (/). But if 
the charter-party amounts to a demise of the vessel, then 
the iua.stor frequently .-.i-n^ a>. aueni of the chaiierei. 
(h) (iS.iT). L. U. :• Q,. 15 80, ;•:. (() L R 2 y. Ji. 8(3. J^ 

Bill of Lading. 


wlio is for the tinie bein<i tlie ownor of the vessol (h). 
All iii<l()rs(u> of the hill of lodin;.', \vli(» tukew it homi iide, 
.111(1 for value, mid without noti<«; of the charter-party, 
may hold tin; shipowner to the terni.s of the bill of 
lading' ; l)ut if ttiis indirseo wa.s awure of the chaiter- 
party when hi; took the bill, the shipowner will not be 
hound if tlui bill of ladinLi; was si<:ned without the ship- 
owner'.s authority (/). 

The master has no authority to si^n a bill of lading 
tor goods not attually received on board (m), and if he 
does .so, the ownens are not liable ; but his signature is 
prima facie evidence against the owners that the goods 
were shipped, and it lies on the owners to rebut this 
evidence if they allege that the goods never were on 
b<)aid (n) ; however, a bill of lading will not be oven prima 
facie evidence of cpiantity, if it contains qualifying words, 
such as " A quantity of 937 tf)ns, weii.'ht, etc. un- 
known " (o). By express stipulation the bill of lading 
may be made conclusive evidence against the ship- 
owners of the quantity shipped (/>). As regards the 
masters liability, l)y section 3 of the Bills (>f Lading Act, 
1855, " every bill of lading in the hands of a con.signee or 
indorsee for valuable consideration representing goods 
to have been sliip[)ed on board a vessel, shall be con- 
clusive evidence of sucli shipment as against the master 
or other person signing the same, notwithstanding tfiat 
such goods or some part thereof may not have been so 

(A) L. R. 2 Q. B. 96; nnd sro BaurmcoU, itc. v. Fiirness, [1893] 
A. C. 8. 

(/) The P'llria (IS72). L. R 3 Ad. & Ec. 43t). 

(w) McLmn v Fkmiiig (1872), L. 11. 2 U. L. Sc. 128 ; Grant y. 
Nvrwtty (1851). 10 C. B. (Km. 

in) Smith v. Btdouin Steam Navigation Co.. (18'Jiil A. C. 70. 

(o) A'eM' ('hine/fe Antimony Co. v. Ocean S.S. Coy., 1 19171, '■^ ti. B. 

(p) Liahman v. <.hristit (1887), 19 Q. B. D. 333. 



•*hi|»|)iMl. " Hitt, uv»'H tilt! iii,i>H'r will nut Ixs liiiblt* 
it — (i) the ljol<lor oi tlio bill at rli« timo of KH-nivin;: it 
l.> auiirft that tho i,'(i(k1s havt; nut ln'oti iutiiiilly slii|»j)C»l : 
i>r (ii) tho misr»![.testMitati<'n in the, hill was caused bv 
the Iraud of the Hhippor. the holder, or of some person 
under whom the holder (-laims (7). Xeith«!r does the 
oection e.sto[) the shij)ownei' from sliowini^ that ^()o(i< 
incorrectly described in the bill of lading' by mere 
marks of idcntilicalion. havin,: no >ijiiificanco in 
respect of their (juantity, tpialitv. or commiMi iai valiif, 
are in fact the ^oods which wfi.! ,-hipped undei' the bill 
of ladini; (r). 

in ^iivini.' a bill of ladin^ the nia.ster lan binil the 
shipowners by any terms which it falls within lii< 
express (1 implied authority to make, subjtut to thi-.. 
that if the shi[) is chartered, ho may not sii;n bills ot 
lading vaiyini; the teiriis nf the charter, unlc^H the 
(barter itself so allows, or imh-^-: he (tbtains expres-; 
in>tructi(»U3 to do so (s). 

The fj;eneral dnty cast ufion thesliipowa 1 i. -an. 
the ^^oods with safety, subject to any limitations atiiced 
upon. Such limitations are (c.7.) exceptions from 
lial>ility for damai;e caused by the "act of (Jod .Mul 
the King's enemies," " ac<'idents from machint'r;-.'" 
etc. Others are mentioned, and the law has lie.-i* 
di-scnssed in considering the corie.sponding proviso m 
a charter-party {<). 

^Vhea the bill states that tiio uoods are shipjied "" in 
good order and condition," it i«! called a clean bill ,rt 

-; ;: 1 

17) S( ction 3 ; aniJ isii- Valuri v lloijland (ISlWi). L. H 1 C. P. 0^2 
(/■) Parsons v. Niw Zmhind Shipping Cu., [I'JOIJ 1 Q. B. j4s ; 
6 Cou!. C'a.-:. 1!. 

{a) Jiodocunachi v. Milbuni (1>ST1. 18 Q. B. D. 67. 
I/) Ante, yp. 431, 438. 

Bill of Lading. 



lit<lia<,'. Those words refer to the apparent ami exteiual 
I ouditioii. and, though they are not woixls ot contract. 
the iiia8tor can bind hi"- owntiM by such a statement, 
and it' it bo untrue the latter will be hable in duniaues 
I" an indorsee of the bill of lading,' who aurters loss by 
ai tini? on tho faith of the roproderitation (*/). 

A bill of ladini? is not only a doiuiuent containiui^ 
the terms of a contract of carria<^e, it is in addition a 
document of title ; it is tho .symbol of j^oods at sea, and 
romains so until tho ^oods have come to tho hands of a 
jxTson entitled under the bill of lading to the possessiou 
'>1 them (r). The per.soii to wh<»m the bill is made out 
may transfer liis rights under it ; if tho bill is drawn to 
■ •ider. he does .so by indorsing tho bill and deliverin«; it 
to the assignee; if he merely indorses it, the indorse- 
ment is in blank, and tho bill then passes from hand to 
liand. as though it were drawn to bearer, the holder 
IteiuL: entitled to fill up the blank as he chooses (,/;). 
It the bill is drawn to a specified per.son without the 
addition of the. words "or order or assigns," it .soeni> 
not to b»! negotiable iit any of tho t>^rm. Con- 
sotjuently, whore a bill of lading can be transferred b\ 
indorsement and (h^livery or by delivery, the trans- 
feree is entitled to demand posse.ssicm of the goods 
as owner or pledgee according to the nature of tho 
transaction (i/). 

The transfer of a bill of lading drawn to order, though 
it passed the goods, did not until 1855 transfer the 

(»; ComiHihiu Narkiu Vasioiiimhi v. Churchill, [I'JUOJ 1 K. B 
(' ) Biirbtr v. MtyuMtiti. (1870). L. K. i H. L. 317. 

(x) I'tr Lord Sei.bokne, in Sewill v. 

,!. s;5. 

ilsu till 

ic ajKviai villi 


Burdick (188o), 10 Apji. (. 
:barriJic v. Mas 

1 .Sm. L. C. (I2tli id.), at p. 7o4. 
('/) fit'OeU V. I{urdick(lHSo). 10 Ajip. d 



The Contract oi" Affreightment. 

'I . 

ri^ht to .sue on the contract. But Itv the Bills of 
Ladini; Act, \S')^), s. 1, it was provided tiiat "every 
coiisinaei! of i^oods tuinied in a bill of ludiii'i, and every 
indorsee of a bdl of ladin.i^, to whom the pioperty in the 
•iood.s therein mentione<l shall pass, upon (jr by reason 
of surh consignment or indorsement, shall have trans- 
ferred to and vested in him all ri;j;hts of suit, and be subject 
to tho same liabililif.s in ii',.spiu;t of such 'ioods as if the 
contiact contained in tiio bill (»f ladiii'j; had been made 
with himscll."" It has been docided that the pledue of a 
bill of lading does not /n r se pass the pro[)crty (;) within 
the mcininj; of this seciiou, so ihat tht! jded'^ce is not 
]i.i,!)le to p.iv the ficiLilit ; but the case "s otherwise ii 
the ph;d-ee exeicise his riuht to tnke ])os>ession of the 

-oods (C). 

The master must deliver the ^oods [,, the (•onsi^nee 
upon payment of liciLiht ; or if the bill has been 
properly assigned, then he should deliver to the holder 
of the bill. 8ometimt!s the bill of ladiim is executed in 
duplicate or triplicate, and the ditl'eieut paits may iiet 
into the hands of dilterent [lersons ; in such case the first 
trausfeice for value is entitled to the goods {a). But 
the mastei- who, acting' bona fide and witlutur notice 
of ctnillictniu claims, delivers to a holder who presents 
anv of the j)aits of the bill of ladin ; to him, is not 
liable if it should prove that that Holder is not the 
first transferee (b). This is a coiLsecpience of the clause 
found in bills of haling diawn in a set : " one of 
these bills of ladini; accomplisheil, tln^ other sh,.!l stand 

iz) SeatU V. n,irilc:k (ISS.")), 10 Ap|). Cas. 71. 

(a) U<irh.r\. M>ij',st,n, (ISiiT), L. It. 2 C. l". ;fS, (itil : 4 IT. L. .317 

('/) (.'///", -1/ (//■•.■ iL- (■',. V. £>(../ (111(1 W't-t liulia Docks (lt>f2). 


!';i:, :><\i. 



It the master Las notice iii ronllictini; claims, it is his 
duty to interplead. 

The '■ ueuotiahihty "' of a bill of ladinii has heeii 
dealt with (c), and also tl "• cll'ect of indorsement of the 
bill of ladin'i on the r )j>ai(i v'lidi.r's rights id). 


Freii,'ht is the name 'jiven to th(i reward paid to the 
■ihipowner for the carriaL'e of Lionds. It is not pavable 
until the vctya^e has becni completed and the yootls 
delivered, unless non-ilelivery is caused by the fault of 
the shipper alone, or bv the perils excepted in the 
(;harter-j)arty oi lull of lading (f). If tli<! shipowner 
abandons his vessel without anv intention to rt>take 
i)ossessi(>n. even if he doe.-, so under of weather (/). 
the cariio owner can treat the contiact of aff'rci.Lihtment 
as at an end. and ii the car^o is subsecjuently salved be 
lan take possession of it witliout payiiiL' fiei-ht. But 
where ship and can-o had been abandoned bv tlie 
Miaster and crew on beini; attacked by an enemy subma- 
rine, and the ship was for a time erroneouslv believed to 
have been sunk, but s]u'[» and car-o were subsequently 
salved, the J louse of Lortls held there had been no such 
abandonment of the ship as to entitle the carco owners 
to claim [tossession of the car^o without payim: freight ((/). 

Sometimes it is stipulated that the payment shall be 
made before this tim<\ in which case, unless otlierwise 
aur(;ed. the failure of the voyage gives no right to the 

(c) AiUe. p. 305. 

(d) Ante. pp. 28t, 28.-), ;!0r>. 

(e) Ltddiud V. Loprs (\m\)), 10 £,1.-1, .")2ti. If the is wrecked 
the ship wniT may transhi|) thi' goods to cnm fnight (IlunUr v. 
I'riiUitp. ibid., 378 ; and sec as to lump sum freigiit, post, pp 448 14<J) 

(/) r/ie TtVo (1881). 7P.D. 5, C. A. ' 

ig) Bradltij v //. Niw.fiim, .Vo/w <fc Co., [1910] A. G. Iti. 


i m 



The Contract of Affreightment. 

letiirn of the inonex-. '" Adviiuco freight/' if payable, 
is due at the moment of slartiuij;. iiuless otherwise 
agreed : even if not paid it can be recovered by tlie 
.shipowner from the eliarterer upon the loss of the ship (h). 
But if any goods are destroyed before the ship sails sm 
as to make it impo.ssible that any freiglit could be earned 
1 >n tiiem, advance freiglit will not be payable on the portion 
ni the cargo destroyed (/). Each case depends upon its 
own circumstances, and to these it is necessary to look t(.» 
determine whether a given payment is intended as freight 
in advance, or as a loan ; and though it be called " freight 
in advance,'" it by no means follows as of course that it 
is such (/:). 

If the charterer fails to load a full cargo according to 
agreement, he is hable in damages ; such damages are 
styled " dead freight " (/). 

Lump Sum Freight. — This is an entire sum to be i)aid 
for the hire of the ship for lue entire service (m). Where 
a lump sum freight has been agreed upon the shipowner 
is entitled to tlie whole amount if he delivers any part of 
the cargo which he is not excused from delivering by the 
excc])ted perils. If the whole cargo is lost, no freight 
will be earned, but if a substantial portion is delivered 
and the residue has been lost by excepted perils, although 
the .ship does not arrive, the whole freight will be recover- 
able (n). 

(/.) lijrne v. Sclnllir (ISTl). L. K. (i Ex. 319; and per Eshek, 
.M.R., ill Smith .(• Co. V. I'l/mnii d- Co., [ISKIJ 1 Q. li.. at p. 7U. 

(i) W<ir <i: Co. V. ain-iii, d; Co., [lOOOJ i Q. B. 45 ; o Com. Ca-. 4U. 

(k) AUixoii, V. LVi'vto/ Miirinc limirnnrr Co. (ISTil). 1 Api>. (.'a-. 
:>0<J. 217, 233. 

(/) McLean v. Fhmimj (1872). L. R. 2 H. L. Sr. I2S. 

(m) Robinson, v. Knajfttf L. R. S C. P 4t:;5. ^h r J. 

in) Thomi's v. Hnrrowim] S.S. Coy., [11)151, A. C. uS, whiTc cargo 
was di'livi-rrd a sliiji wnxki'd outr-ido tho port ot discharge. 



Where owinu to the outbreak of war a ship is compelled 
to discharge it cargo at an intermediate port because 
tlie further prosecution of the voyage is illegal, the ship- 
owners cannot recover the freight in whole or in part 
and no fresh agreement by the (jwuers of the cargo to 
pay fre'ght pro rata, will be infoned from the fact of their 
raking possession of the goods (o). 

Freight pro rata. — This is the term given to a pay- 
'ucut whicii is sometimes made for carriage of ^oods 
w'uou the contract has been porforiiKHl in part orly. 
Tin' rule is thus set out iu Maude and I'lillock on 
••iiippin'i (/>) : "It the original contract has not been 
iM'ii'ormtid, no claim can aiise undoi' it ; l)ut if there is 
ci .oJunl'tri/ acceptance of the goods at a {)oint short of 
I heir destination, in such a mode as to raise a fair 
inference that tlie further cariiage was intentionally 
dispensed with, a new contract will l;e implied to pa\- 
I'ompensation commensurate with the benelit actually 
received ; that is to say, to pay freight for that portion 
of tlic voyage which /las actually been performed." 

Shiponner's Lien. — The shipowner possesses a lien 
upon the goods which he carries, \mtil he has received 
payment of freight ; it ceases upon tlelivery of the goods. 
The lien extends to all the propeity consigned on the 
-.aiue voyage under the same contract by the person from 
whom the freight is ilue. So that delivery of a part 
does nt^t defeat the lien on the remainder (q). In many 
cases it may be inconvenient to retain them on board, 

(o) 8t. Enoch ShijipiiKj Co. v. I'husphale Mining Co., [I'JIOJ 2 K. B. 

(;;) (4th (d.), p. 3(18. _ 

i'j'l Sodtiijitii V. llttjlit [llViit), C[iiuiiii I, Ea-j, p. ii22. 

M.L. Q 


The CoNTBAcr ok Affreightment. 


I mil 

aiul vet if laiultul the lien upon them would be in -Oi 
oi bein.; lost ; this difricuity is provided lor by ituin 
sections of the Merchant Shipping Act, 189i (r). The 
shipowner has a hen for -i;enoral averai^'e (s) contributions, 
and also for expenses incurred in protecting tlie lioods (0- 
Tlie lien for frei-ht and j^eneral avora-e is a po.-sessory 
lion ; the lien for tlie expenses is a inaritinie licni. In the 
absence of aureemeut or usau'e yiviuu a lieu, there is no 
lien for dead freight (u). 


Average is of two kinds : 

(1) Farlicukir Average arises whenever any damage 
is done to the property of an individual by accident or 
otherwise, but which is not suffered for the general 
benefit, e.g., loss of an anchor, damage by water to cargo. 
These losses remain where they fall, and no extraordinary 
compensation is ;^rauted in respect of them. 

(2) General Average.— X general average loss is 
caused bv or directly consequential on a general average 
act, which occurs where any extraordinary sacrifice or 
expenditure is voluntarily and reasonabl}' made or 
incuired in time of peril for the purpose of preserving 
t!ie property imperilled in the common adventure. The 
loss must be borne rateably by all interested (x). 

Extra, irdinary expenditure must be connected with an 
extraordinary occasion, and tlie expense of hiring a tug 
to accelerate the voyage in time of war so as to minimise 
the risk of destruction by enemy submarines is not a 

(r) SicttHit. p. 4J5. (■■>) See billow. 

(0 iliii'jdon V. ir. /(</i (iSTii). 1 Q B. ]). 307. 
(u\ 8'jo ScTUtton "II tlh;irt( 1 iiarties. Alls. H'J tt acq. 
(x) Marine liHuniiur Acl, U)i)0, s. 00 (1), (2), (3). 



•nieral average art, because the risk of beiiit; attacked 
)V the Kiu.;"fi euemies durin-j; war is not au extraordinary 
n abnormal peril (y). 

Tht! (!.ssontials of a uenerul avoram^ jiacriiice ar<' 
il) that it was incurred to avoid a danu'er common to 
ill interests (t) ; (2) that it was necessary to incur sonn' 
sacrifice (a) ; (3) that it was voluntary (6) ; (i; that 
it was " a real sacrifice and not a mere destruction or 
1 asting off of that whicli had beccnne already lost and 
consequently of no value " (r) ; (o) tliat the ship, cargo. 
<n- some portion have actually been preserved («) ; 
!')) the dan'jer must not be one which arises throu-di 
the default of the interest demanding a general average 
'Diitribution (d). The last rule, however, does not apply 
to cases where the loss is brought about by the inherent 
vice of the subject-matter sacrificed. Thus, where coal 
shipped without any negligence, caught lire owing to 
its liability to spimtaueous combusti«m, and water was 
poured into the holds to extinguish the fire, the owners 
of the coal were held entitled in respect of damage done 
by water to the coal which was not ignited, to a general 
average contribution from the ship (c). 

Ordinary cases of loss which amount to a general 
average loss are: jettison of cargo (/); voluntary 

(y) Societe Xoucdle d'AnnemoU v. Spilkrn d- Luk, n, i I'J] 7 I 1 K P> 

(:) Nt.6hiU V. Lu-'<hiiu)ton (171)2). 1 T. U. 7s;!. 

((() Pirif V. Middle Dock Co. (ISSl), 4t L. 'J'. r2t;. 

{!>) aiuphird V. KoUi/cn (1877), 2 C. 1'. 1). 5s5. 

(() I'lr Wii.MAMS. ,1.. ill I'lric v. Jliddle Dock Co. (Issl), 44 L. 'J'.. 
at p. 4;iO ; Iriddh v. Chiiui Tnidi /■■<' Insurnnct Co., llS'.t'Jl 2 O J5" 
3o« ; 4 Com. 2-iti. j nj- . 

id) Siniwf V. Sroll (ISS't), 14 A\>\). Cus. 001. 

(c) Cran.'ihuld.i. Cuwit cfc Co. v. SU pheri.t <l- Soits, [ISIOS] 1KB. 51. 

(/) If cargo sto\v<d on dcuk is jettisoned, tberu is no rigbt of general 
:!v;>mg;- rnntrihiiiion from the other interests, unli.=,s, Jelk stowage i,^ 
ullowed by o.xiiress agreement or by custom of the trade or port. 


The Contract ok Akfreightmknt. 



-tiaudin- to avcid wreck ; daina.uc to car,i;o by scuttlinji 
Mk; sliii) to extinLjuisli fire : t'xptiiiscs of ])iittiiv4 into a 
jH.'t of iffii-t! for tli(( prcM'ivatioii of .slii|> atid cariio. 

Whatcvor comes \mdcr the head of <:eiieial avcraue 
loss must be shared l)v those who liav.> ItetMi in a 
position to be bem^tited l)y the sacritice, e.g.. the owners 
of tlie ship, and the freiulit, and " all merchandise put 
nil board for the beuelit of tratlic must contrib\ili' '" ; but 
iht' wa'ies of the scaiueu an,' not affected. Where the 
i:en<Mal average act involves a voluntary inj\iiy to the 
propcrtv of third persons, C.7., to the pier of ;i dock, those 
benefited must couiribute their .share c>f the dama-es 
payable. altli<m,L;h they may be in tlie position of joint 
tort f(!asorrf, the priiiciph' of the common law laid down 
in Mrrri/treathcr v.' {a) having no application to con- 
tribution in i^eneral avera-e (//). Carjjo which had been 
landed to ensure its safety and not for the puipose of 
iiuhteninu tlie ship, is not liable to contiibute in respect 
of a .Licneral average loss srd)se(piently incurred; such 
eaiuo was not then at risk, and deiived no benefit from 
the .sacrifice (t). It is the duty of the master to retain the 
earuo until he has been paid the amount due in respect 
of it for ii;eneral avcraue. 

The rules relating to the amounts to be made good 
vary in different countries. In the absence of agree- 
ment, adjustment of tlie amounts to be contributed in 
respect of general average will take place at and accord- 
imi to the law of the port of discharLn% i.e., in general, 

((/) ISm. L.t'., 12tluil., i4:i. 'i'lli^ca^t■ d( ciikd tiial tliLii caunot 
be any ccii'irilniiion IxtwiH n joint, tort tV aj^urs. 

(A) An-sliii Friar.s .S.S. Cuij. v. SpiUtrs <t- iiV''.'. /•■, Ltd., [1915] 3 
K H .-.sti. 

(() J!uyal Mail Stoiw I'ackd Co. v. Liifjihii lioih: vj lUo Janeiro 
il^Sl), 11» Q. B. 1). 3('.2. 



the place to which tlio vessel is destined, unless the 
voyaiie is justifiably tenniuatod at an intermediat.' 
port {k). But a teinj)orary suspHiisiuii of the voya'4e at 
a port of refu'j:e does not justify an aveia^'o adjustment 
there (/). It frequently happens tliat, in marine insui- 
aneo policies, the underwriter agrees to be liable for 
general averai^o " as ^)0.v foroii^n statement " : this binds 
him as to the correctness of the statements of th'' 
foreign avera^^e stater, and to accei)t as general averu-t' 
whatever is such accordiu'^ to the law of any foreign 
place at which the adjustment is properly made (m). A 
M^t of rules intended to be the basis of a uniform 
practice in all countries was adopted in 1«77 ; this 
set— known as the York-Antwerp rrdes— is frcqucntlv 
adoptetl in 

contracts of alVreightment and marine 

ik) Siniond^^ V. White (182-t). 2 K & C. 805. 
il) Hill V. Wiiion (IHI'.^), iV.l\M. 3-2'J. 

()») M'lrro V. Occ'in Mnriii" In^aran-cc. Co (1875), L. R, 10 C. I'. 

( 454 ) 

sli;ktvsj[ii> and iju.ahantees. 

-Vatiuk and Kormatiox ok t.,k Contract of 
(jcarantke. per.,,,,. Sn-L .„ „,,»e,n™t ,„„v b„ i„,„„do, 

„nn«tul «,tl, „ ,„„„,,„t,|„ t,ans.i,(i„„. ,„■ it „„.. ,,. 
to se,,,,.,, ,,.,„,,,,,;,, ,,,„p„„,,„„,„,,,^^,''^^^.^'J^^ 

:;::';:"""^" "-'»rt.,.f »„..„,„,„,': ,„.,/:,:; 

^lat. to .„„„er,„„ „t|,er ,„atter,.. J„ tl,„ present 

Laptor ,t ,, p,,,p,„e,, t„ aoai with ,„a,.a,.tee» ,'e X 

t" •"er,,'ant,lo tra,isarti„ns rmly. '<-»im„ 

An asreen,ent to ansive,- f,,,- t)„, ,|,|,t j,.,. ,,.,a,„ of another neoci ,.„t l,e in a„v J,," fo,:,n 
1.. as the c„nt,,ut i, one within tl,e p,ovi ion, „7 4 
"I ti.o ^.atnte „f, it is not e,JoL.,,,|e Z lion 
unless ,t ,s „vi.le„ce,l hy a written „,e,„o,.and„t 

to sat,..l,i the statute have hecn state,! Ic) ■ b„t 
' -s not noeessa,,. that the n.en.orancl,,;,, ,„ a Int 
. o .Id c„„ta,n any sta,e„,ent „, the e„nsido,a^on , e, 
to the .„a„.,„„,. ,„ r„t„,,, ,„, the ,„„,„„,,.„ ,^,^ ^.^^^ 

Is) Ante, pp. (i^rstj. ' ' • 

(d) Jr<mintilf Law Am. n<!T7i. nt Ac* is-.f — -■ v - 
« ^.a.onunt of conHider«tion in th. ^i(d^;.:r:.,J:^'' ''" '" 

Xatlrk. etc. of Contract ok Guarantee. 4;"),") 

last statorncnt must not bo. misunderstood. It is not 
intended to import that con.sideration to the «,niarantor 
is tmnecessary ; as in all other contracts consideration 
must be «_dvft'i to the promiser (c), save when the 
guarantee is under seal. Wliat is meant is that the 
document si<;ned by the ^Miarantor may comply with 
the Statute of Frauds, although this consideration bo 
not mentioned or indicated in it. 

As a guarantee is for practical purposes almost useless 
unless it bo evidenc(;d by the proper writinL'. it becomes 
necessary to consider the main features of a .i;\iarantee. 
They are (as applied to mercantile transactions), it is 
conceived, tho following' : 

The contract of ijuarantee involves the existence of 
another contract, one party to which is a partv to the 
contract of guarantee ; in fact, there must be two con- 
tracts, one party bein<i common to each. That party 
is the creditf)r ; to him the principal debtor is or 
is about to be under a liability on tho principal 
contract ; and to him the guarantor or surety is to 
be liable if the principal debtor breaks the principal 

The contract is not . -uarantee within the statute if 
the collateral or suretyship contract is not made with 
the creiUtor (/), and there must be an absence of any 
liability on the part of the surety, except such as arises 
from his express promise {g). 

Thus, if A. says to B., roferrinj^ to C, who is askim;' 

(e) fiarn-ll v. TrusxtU (1811), 4 Taunt, 117. Tho consideration 
may lx>, and ofUn is, forbearance to sue the debtor. See, c.ij., 
Crears v I/uutcr (1887). 19 Q. B. D. 341. 

If) K'i:f::-nn.> v. K':vyc-P (1840), 11 A. & E. 138; Re Huylc, [1S!)31 
1 Ch., at i». <)'J. 

(g) VVilliaiu.s" t«ai!iider.=, 211 c, note (/). 


Si RKIVMIII' AM. (;i\H\NT|;k>. 

< ' m 

|{. t..sell •■ to hi,,,, C. •■ L,., |,i,„ tliOu.,n,l>- 

It lio ,loos nnt i.uv you. I will.- t|,i.s is un (.ftVr -t a 
-uamntc o„ i!.,, part of A. (A). Sl.nul.l he .s.v. - Give 
C. the p.o.Is. I will Im. ^,mv pavmastci,- tlic' le.siiJt is 
not „f ...Mossitv tho sa„,o ; lor the w.,nis n.av sIm.w ,„ 
iuto.itinn o„ A.-.s i.urt to ,,av i<.r th." -oods in anv cvonr 
an.l not ,u.iv\v (/>) if c. fails to pav. A (,uestion of 
f.'.ft is iiivolv.'d in this illiistiatinn (/). 

Tlinv are contracts for uhi, h no w.itinu is ,C(,uiietl. 
wlii.h a|)i),-.,a(h in chaiact.'nstics closely to ,-;iiaiaiitces ; 
ami those various fontrmts were classiiied aii.l dis- 
tni-nislied l.v t he Comt of Appeal in Ih,rb>mf. eh: Co v 
Marten {!:). The ohjecf of the .•..nt.a.t nnist he ,e- 
uardod. and if tlie pa^•n,(.nt of another's deht is onlv 
mvolv.'d as an incident ,>f a lai-or p.nj.ose. tluit fact 
u-ill not, hiin.. it withi.i the Statnto of F.ands. A person 
who., havi,,, pinvhased .^....ds su])ject to a lien, ohtain.s 
'l"iiveiv upon a ve.bal p.o.nise to pav oil the lien, will 
1"^ I'ound : his ol,i....t is to f,ee the uoods f,on. au 
111. unilnance. not to pay anothei-.s debt (/). In like 
manner the e,nphn-„ent of a del credere a^-ent n-juires 
no wntm,-. althou-h luuler the to,n;s of that on. loy- 
ment th.> a-ent may become answerable f(n' the 'debt 
"i another (m). lint an oral i-romise to jAnarantee the 
debt ol a con,],inu- by a, p.Mson who a fioatin- 
charge on its assets and who is imlnced to make the 
contract by icason of that interest, is none the less a 

(/.) r.irknnir v. Uarndl (ITUJ), 1 Sm. L. C. f I2ll, ,d.) ;i,"5 
{\,h.), 1 I H. 80 ; a„,l s.- th. judpinont of, J. in Moiait 
{k) [l!»02]JK.B. 778 ^- ■• • '•''• 

(/) Fi/zfjtrnld V. Dnsshr (I80l»). 7 C 15. (n S ) •{7.t 



pioimso wliich is subject to the ()[ieration of the Statut*? 
<it Frauds (n). 

C'ertaiii " imlemuitios "' must be distin;:uished from 
viitaiantt.'.t>s, alth«)U;,'h ot cDursti tho creditcjr in all 
'^uaruntees is indeiunilied a-aiust loss by tho suret\-. 
The taso of duild v. Conrad (o) may sorve to illustrate 
thi> distinction. Tlie lictVnulant in that case oralh 
[Hoiniseil tin) phiintill that, if the plaintiff would accepi 
certain bills for a firm which tho defendant desired to 
assist, the tlefendaut woukl provide tho plaintiff with 
lands to meet the bills. The defendant was held liable 
on the ^'round that the promise was to indemnify the 
plaintiff auaiust the liability ineurred by acieptiu;,' the 
bills, indepeudently of the questit^n wJiether the tiitu, 
which was primarily liable, made default or not. 

LlABlLlTV OF Tiii; SlkKTV. 

The amount of a surety's liabiUty is fixed by the 
terms of the cniUract ; sometimes a specified sum is 
[layable as licjuidated damaues ; more j^enerally tiie 
amount upon breacii is determined as in the case of the 
(iiiucipal contract. Tho surety's liability (which arises, 
a-^ has been stated, only on the principal's default) is 
limited to the amount which the surety has undertaken 
til p.iy on such default. This may be the whole amount 
dih' by the principal debtor, or it may be something!; 
smaller beyond wluch it has been agreed that the 
surety's liability shall not extend. 

It the guarantee is one which the surety has entered 
into jointly with others, he is still liable to pay the 

in) Davys v. Bwwell. [1913] 2 K. B. 47. 
(o) [1894] 2 Q. B. 8S5 







whulo aniMunt lie has aL,m.(l f, j.iv om tho .lehtci'.s 
dftfawlf. unl.vss tl,.. unnlii.u u| t|„. ^.Kuant,',. ..Iherwiso 
provi.luH. His ri-l.t of c.ntiihiition «o-Huretio.s 
may In,, a puitiiil iii.loniiiitv, Uiit ho .aimot, in tho 
uh.sencc of amnniient l)in,lin- tlio ticlit..,-. .oinpel the 
creditor t.. proceed u-uirist the other sureties, it 8cein.s 
also tliat tJie «„retv eanrmt in.sist that the creditor 
■'hall sue tlie debtor hel,,,,. resortin- to hit.,, even upon 
-ivin- an itideiniiity against the cost ami d.-lay of siu h 

'•""' '■"'-"• '!"'»' «iii<'ty is n.,t hutuid l;v anv decision 

as to the liahility of the debtor in ac tions to" which he 
uas not a part v. and may insist (at his own risk as t., 
coats) that tho ri-ht of the , reditor shall bo proved 
against himself (/>). 

Tpon the constnution of the contract there is some- 
tunes a .piestion whether or not the .miarantee is c(.n- 
tuiuinu, ^f-.. whether it is intended to contiruio until 
recalled, .,r whether it is to be confined to a .sini;le 
transaction or debt, ff A. guarantees li. to the exte'nt 
"f anv -oods he niay i)urchase from C. not exceedin;, 
i:i.><», he mav mean to -uarantee the nu.nev due on all 
H.'s purchas.'s provided that they never exceed £l5ii 
or he may intend to .guarantee B. 'until he has obtaino.i 
£laO worth of thin-s, and then stop. Each case must 
t-e decided ..n the lan-naue of tho document, and the 
presumed intention of the parties, for no definite role 
can be drawn from the decisioius (y). Thus, in AUnuft v 
Ashaiden >r), the agreement ran : " I heiebx- guarantee 
B.'s account with A. for wines and spiritt^ tothe ann^unt 
of £100" ; there was at the time wlien the liuaiantee 

(p) Ex parte Young, Re Kiichhi (1881), 17 Ch. D. ( .iS 

(iffi,'*-k:.?^'v,i"jS' '•■ "■ ■" «• "■ * ■■•" »» ' '■• '-'■"'- 

(r) (1843), 5M. &G. 392. 


KlUins Ol A f5URtlY, 


WHS iiiii.l.- iiu accnunt ♦•xiNtiii'^ between A. nnd H., 
tiuMi-h at tli« tiiiit! tho uiiiount duo in ((.nno. tiou with' 
It was less than f KM » :-//,,/,/, ^ -i.araiit.'o ni tlio exist- 
ing uccuiint i,n\y. Hut in H'^W v. Pnesffwr (s), I 
was in.hiljtt'd tu W. lor cals .supplied .,n credit, and 
he dtwiml in buy more; liis father -ave the fuHowin- 
mmianteo: "In (on.-ideraticn of tlie credit ^iven by 
\V. to Miy Hon tor coal .supplied by thciu to hini, I hereby 
hohl uiy.self resporinhle as a uuaranteo to them for the 
Mini of £100. and in default of his paynieat of any 
iiccounts .lue. 1 bind niysolf by thia u.ite to pay W. 
wliatever may be owiu',', to an anionnt not exceeding 
£100 ' : — lltld. a contirminu guarantee. 

Ri(;hts ok a Sukkty. 

In acUlitioii to the u.sual riuhts of a coiitiai ting party, 
such as ri-ht to relit-f on the ^lound of fraud"^ or i,n 
the ground that conditions agreed upon have not been 
()b.served, the peculiar position of the surety gives him 
spcicial advantages, lie is a favoured debtor. ^ 

in tire (irst place, th.^ intended surety is entitled to a 
fair opportunitv of making in.juiries as to facts which 
mi-lit iulhience him in deciding whetjier or not he will 
enter into the contract, and any fraudulent concealment 
or materiul wilful misrepresentation will avoid it"; 
tliorigh, as a nile, there is no duty to make disclosures,' 
there is a flutv not to mislead an intending surety, and 
very little .said which (night not to ha\-e been said, or 
' ory little oiuitted which ought to have t.een said, will 
avoid tho contract (0- When a continuing guarantee 

(i (1867). L. R. 2 Ex. fifi, 282. 

w/m' i("'.';.n '■•{'"'"'"" ""</ I'roiiiicial Marine Insurance Co. (IsTS) 
^ ( h. U. 109. Under sj^-cial circum.stanc^-s tk ro may even U' a duty 



lias Ij, ..'u ^iveu. the croditnr must not conceal any facts 
wiiiih to Jiis knowledi;.? ]ia|)])en subseqiientlv. and which 
u-ould uive the .snretv a li.dit to avoid tlie cou- 
rract (/<). 

The faihiro of the princi|)al d.'btor to meet liis en!ja-:e- 
nient nnist not be biou-lit about or facilitated by any 
aet^ or vlefatilt of the creditor ; but mere laches of tlie 
"bli-ee or passive ac.piifsscoiice in act; which are con- 
trary to the conditions of a Ix.nd. is not sufFicient of 
itself to lejieve the sureties (ii). 
AVhen he pays the debt he has the following ri-hts • 

1. Afiainst (he Principal Dtbtor.~To recover, with 
interest (x), from him all money properly paid when 
dne (//) on account of the uuarantee, jtrovicled, of tourse, 
that the debtor was a ,-ons.»iitinLr party to the suiety- 
.-iiii) (//). WJietlRT ()!■ not the costs of disputiui;- the 
claim of the creditor can be recovered fr(.m the debtor, 
depends upon wjiether the (Expense of resistance to the 
chum was reasonably incnricHl ; and it is advisable to 
inform tlie principal debtor of intended payment of the 
(T.'dJtor"s demand ; this enables such defence to be set 
111. as the debtor thinks iit. and prevents diiliculties 
which Jiii'Jit othciwise ailse when the suretv demands 
hi< indemnity fr..m the })rincipal (2). The surety also 
] ontitli'd to euforce a.i^aiust the debtor the "ri-hts 

I.. (li.sclo.M Jill niatiriil facts (.SVo/-);; v. liurnund, \{hW\ ] Q ]j 7^0 . 

^'^198^'"' ^''^ ' '''■'"'■^'''' ^" *'"' ''"^^'"- ^^'•'"••J ^- <'• l-"*5; r. <;oi"i.' 
((') Sr,. IL.- judKiiinit of Denm.vx, J„ in Ma„or of Dudam v 

(x) Pdre V. iJuvcomhc (1851), 20 L. J (} B 21-> 

t;/) Kxall V. I'artri.kv (ITU!.). S T. li., at j,.' 'Mu. Tlio ..i^nT. and 
sulr of the P«Rty 9 ).ro[,.Tty uud, r .■.vcution for llu' drbt will entitle 
the surety to .sue the debtor (Roihj,rs v. Mmv (18J0), 15 M & U' 
444). ' • w ... 

.Z) Daff.ih! V. Srnlf (17s!0\_ <}, '■' p^ -i- ^ 

Rights of a ;<irety. 


wliieh the creditor enjoyed in leuaid to tlie debt in 
tiueation (a). 

Moreover, a surety iius the ri^iit before payment 
U) compel th(! principal debtor to relievo him froin 
liability by paying oil' the debt, it the debt is actually 
duft and the .surety admits liability. In such a case it 
rs not necessary to prove that the creditor has refused 
to exercise his linht to sue the j)rincipal debtor {b). 

•2. Ajjainst the Principal Cnditor.-^To be placed in 
the position oi tliat creditor as to all judgments, secu- 
rities -iven by the debtor, and other rii-hts. If he is 
surety for part of the debt only, his rights to the 
-ecurities also are but partial (c). These may be u>ed 
as atrainst the debtor or co-sureties ec^ually, but so that 
the latter can only be compelled to pay thereunder the 
proportionate shares to which they are liable. 

As regards securities, Hall, V. C, in Forbes v. 

Jackson (d), said : '" The surety is entitled to have ail 

the securities preserved for him, which were taken at 

the time of the suretyship, or, as I think it is now 

settled, subsequently. . . . The principle is that the 

surety m effect bargains that the securities which the 

creditor takes shall be for him, if and when he shall be 

called upon to make any payment, and it is the duty 

of the creditor to keep the securities intact, not to 

^ (a) Se.' btlow. Ho may have larger riglits than the creditor had. 
hee Badflcj v. Voiuiolidated Bank (18S7), M Ch. D., at p. 5o(i. 

{b) Aschermn v. Tredegar Dnj Dock, Uc. Co., [I'M'J] 2 (JJi. iul ; cf. 
Morn-son v. Barking Chemicals Company, [lyittj J Ch. 325 

(c) lioodwia V. Gray (1874), 22 W. R. 312. This riglit of the 
5ua-ty doea not t.aki> f roi ' the creditor the right to surrender his 
security on the debtor's bankruptcy and prove as provided by the 
Hankruptey Act, 1014 (Rainbow v. Jitjgins (1880), 6 y. B. i>. l.js, 

{d) (lbS2), i'J Ch. D. G13, C21 ; Dunain cfc Co. v. yorlh and HotttU 
\\iiL-< Bunk (ISSl), App. Gas. 1. 


Suretyship and Guarantees. 

'Aiye then, up or to burthen them with further 

The creaito,-. priority, if he 1ms any. passes also to 
the surety who pays the debt, .,.;., a suretv who paid a 
debt due to the Crown was held entitled to the Crown's 
priority, so far as was necessary for his indernnitv (e) 
^^ By the Mercantile Law Aniendn.ont Act. 1850 s -^ 
every person who,, bein^ surety for the debt or duty 
of another o, bein. liable with another for an^ debt 
or dutv, s1k.1 pay such debt or perforni suc.h" dutv. 
shal be entit]<-d to have assigned to him, or to a trustee 
lor lum evorv judgment, specialty, or other security 
winch shall be held by the creditor in respect of such 
.lobt or dutv, whether such judgment, specialty, or 
other security shall or shall not be deemed at law to 
have been satisfied by the payment of the debt or 
perforn^ance of the duty, and such person shall be 
entitled to stand in the place of the creditor, and to 
use all the remedies (/), and, if need be. and upon a 
proper indemnity, to use the name of the creditor in 
any action or other proceeding, at law or in c(iuitv' in 
order to obtain from the principal debtor, or an^- co- 
surety, co-contractor, or co-debtor, as the case' may 
be, indemmrKati(m for the advances made and loss 
sustained by the person who shall have so paid such 
debt or pcfonned such duty ; and sucli pavment or 
porforman..c so n,ade by such surety shall not be 
pleadable in bar of any such action or other proceedina 
^',^• In-.. : Provid.-d always, that no co-suretv, co-con° 
tractor, or co-debtor shall be entitled to recover from 

!n iP r ^'"'^ ^^urchiU (1888), 39 Ch. D 174 
(\m\), 33 Ch' D. 575) -^•^'•'"■as'- of th.. srctiou (Re McMyn 

Rights of a Surety. 


any other co-surety, co-contractor, or co-dobtor, by the 
means aforesaid, more than the just proportion to 
which, as between those i)arties themselves, such last- 
mentioned person shall be justly liable " (g). 

3. Against Co-sureties. — To contribution from 
them (h). If, owmif tc the default of a principal, the 
sureties (whot'ier bound by the same or by different 
instruments) become liable, all must contribute equally 
if each is a surety to an equal amount, otherwise they 
must contribute in proportion to the amount for which 
each is a surety (i). And in countinj,' the number of 
sureties for tliis purpose, those unable to pay are not 
reckone.1 (/). Thus, if A.. B., and C. are sureties for 
£l.20D, and A. pavs the whole, he can claim £400 from 

B. and £100 from C. or, according to equitable rules, if 

C. be insolvent, A. can claim £G00 from B. But a 
surety who has paid cannot claim from his co-surety 
unless he has paid more than his proportion of the debt 
remaiuing due at the time of such payment, even 
thouLih the co-surety has so far paid nothing ; e.g., S. 
and a. were co-sureties whose liability was limited to 
£1,000 and costs ; upon default of the principal, H. 
paid the creditor a demanded sum of £541 2s. Id., 
beincr half the amount still due on the bond, and claimed 
as a creditor £270 Us. O.Jrf. from S. -.--Held, he could 
ixot claim contribution {k). But if, when H. paid, the 

{g) He may sue or prove in bankruptcy for the total amount of the 
debt, but cannot actually get payment of more than hia iust nronortion 
{Re Parker, [18941 3 Ch. 400). J i i 

(/() Dering v. Lord Winchelsea (1787), 1 Cox. .318. 

(i) Ellesmere Brewery Co. v. Cooper, [189«] J Q. B. 7.') ; 1 Ckim 
Cas. 210. 

(k) Kx parte Nrwwdon (1881). 17 Ch. D. 44 ; Davies v. Humnhrita 
(1840). 6 M. &W., at p. 168. ' 




-nm „r i:>li 2,s'. h/. had Lcen tJie w].(.l(. amount ilw, 
11. would jiiivc l),'('ji able to not »(,utril.uti()n ficm 
>. (/). And .so, wliere there is one d.-bt payable b^ 
instahiieuts, a surety cannot call on a co-surety to 
•■outribiite. until lie has paid more than his proportion 
of the entire debt, although he lias paid more tjian his 
sliare of the part wliicli has become due (w). 

The surety may (it seems) insist upon payment to 
the creditor of the co-suretv's projiortion, althouuh he 
has not yet ],imself actually paid the creditor (;,), 
especially if ju.lamont has been obtained against 
him (o). 

\ co-surety i< entitled to a sliaro of everv counter 
sec'urity which Jias been delivered to any of the sui-eties. 
and such securitv must be brou-ht in'.o Jiotchpot in 
order that tlie ultimate burden mav be equallv 
divided (;)). 


Tlie suretv will ho disrhar-ed (,u any ,,t the -rounds 
which sulHce to put an (>iid to contracts in -eneral (7). 
and also on the f.,llowin-. which are peculiar 'to guaran- 
tees (/•) : (1) .Alerc non-disdoMire without fraud nuiv 

(w) ^tirlin{f V. Burdelt. [1011] 2 C'h. 418 

in) Per James. L.J., in Ex partt Snou-don (1S8I), 17 ch. j) _ ^j 

{o) \yobn.'r.l,au,eny. C.Uicl; [180.3] 2 Ch. r,U. F,>r this purpo^o 
an admiUrd claim in an a<lminiH<ration action is .M.uiv.a ent to 
judgmt'ut (iii(/.). 1U.V.U. nr ro 

ip) Steel V. Diron (1881), 17 Ch. 1). 825. 

(q) .Sec antf, ])p. 82 d seq. 

(r) The contract of suntyship may, however, contain ^xxcml 
dauso« exolud.n- the nrdn-.ary ri-hts of a surety. S..- lor exa n.. e 
Pen'j V. AaUomtl Pronncial Bank of Evglnrul,[i9H)] 1 Ch.,at p. 470.' 

Discharge of thk Si'rety. 


avoid the contract of suretyship, the question in each 
ease Imu'j, whethoi- tlie contiact is of such a nature 
as to import the obligation to (lisch)se a particular 
lact. Thus, in a yuarantee for the fidelity of a servant 
an innocent omission by the employer to infoiia the 
surety of tlie servant's previous dishonesty whilst in 
his employment, will prevent tlie employer from en- 
ff)rcini; any claim in respect of the servant's subsequent 
disjionesty (s). On the other hand, wliere a guarantee 
is uiven to secure an advance on a bankiim account, 
it is not incumbent on the banker, if he is not asked 
for the information, to tell the surety that the account 
is already ovenb-awn (/). 

(2) If tlie creditor has altered the terms of the con- 
tract guaranteed witliout the assent of the suretv. 
'■ The true rule in iny opinion is. that if there is anv 
aureemont between the piincipals with reference to the 
conti-act •^niarantced. the surety ou-ht to be consulted, 
anil that if lie has not consented to the alteration, 
although in cases where it is without inquiiy evident 
tliat the alteraticm is unsubstantial, or that it cannot 
be otherwise than beneficial to the surety, the surety 
may not be discliarjicd ; yet. that if it is not self- 
evident that tlie alteration is unsubstantial, or one 
which cannot be prejudicial to the surety, tlie court will 
not. in an acti(m against the surety, go into an inquiry 
as to the effect of the alteration " (u). 

In Pokik V. Everett (x), Quain, J., said : '• The 

(-1 Jjondon Oenernl Omnibu.i Co. v. HoUoway, [lftl2] 2 K. J5. 72, 

to Hamilton v. Watson, 12 CI. & F. 100, H. L. 
(».) Corrov. r,.J., in Holme v. nrnr..:kiU (1S79), 3 Q. B. D. 195 
at p. 50C. ' ' ' 

(X) (187r.). 1 Q. B. D. 060, at p. 077. 


-Suretyship avu Gltarantkks. 


'-ntiac-t of tl.o .surety should not be altered withoul Us 
.•onsout and the creditor should not undertake to alter 
^ho contract, and then say, ' Although the contract has 
heen altere.l, and 1 put it out of n.y power to carrv it 
-rt bv njy voluntarv act, I now ofTer vou an equiva- 
iont., tunc to the principal debtor v^iU 
'^v<'ep m certain c-ases. release the surety, provided' 
at there ,s a lundin^ contract with the debtor (.) 
Cypress or nnphe.l, written or verbal) to .ive tin^ 
and not nundy a forbearance by the creditor to enforce 

onsent of the surety, ,ives tiuu. to the principal debtor, 
bv so doni. he discharges the surety ; ,.. , if tin^e is 
^iven by virtue of a positive contract between the 
creditor and principal, not where the creditor is merelv 
mactive. And, m the case put. the surety is held to 
be discharged lor this reason, because the creditor by 
«c, givin, tune to ti.e principal has put it out of' the 
power of the surety to con.sider whether he will have 
recourse to his remedy the principal debtor or 
not, and he. in fact, cannot have the same 
remedy against the principal as he would have had 
under the ori^nal contract '" («). To this there is an 
nnportant exception, since a surety is not released by 
an agreement to give time to tlie debtor, if the creditor 
esorves lus rights against the surety. The reasons 
hv tlie reservation by the creditor of his rights a.ains, 
the surety does not release the latter are that(i) it 
rebuts the implication that there was any intentlion 

in) And soe Hcc v. narrirujto.. 2 W. & T. L. C. (Sth ed.) 6Vi. 



t) discharge tlie surety and (ii) the principal debtor, 
l)y consentinu to this reservation, impliedly ayrees 
that the surety shall have recourse auaiust him ; so 
that in effect tlie ri^^hts of the surety are not inij)aired, 
and he may, notwithstanding the agreement, pay the 
creditor and enforce his rights against the debtor (6). 

But after the creditor has obtained judgment aiiainst 
both the principal and the surety, a binding agreement 
to give time to the former does not release the suretv ; 
tiie judgment creates a new liability in respect of which 
the judgment debtors are in the same position (c). 

3. If the creditor takes a new security from the 
debtor in lieu of the original security or of such kind 
as to operate by way of merger of the old security (d). 

•!. A further ground of discharge is the negliirence 
ot the creditor in his dealings with the debtor, or 
misuse of securities held by him for the debt, resulting 
ill iletriment to tlie suret\-, so that the remedies are 
affected. As regards negligence iu dealings, tiie prin- 
f ijile was thus stated by Cotton, L.J. (e) : " If there 
is a contract express or implied that the creditor shall 
acquire or preserve any right against the debtor, and 
tfie cieditor deprives himself o<^ the right whicli he has 
stijjulated to acquiie, or does anything to lelease any 
right which he has, that discharges the suretw ... 
A surety is not discharged merely by the negligence of 
the creditor." For instance, A. lent money to B. and 
P. upon the security of certain goods and fixtures, and 
by the terms of the deed A. was entitled to enter on 
tlie happening of certain events. The deed required 

(/>) Kcarsley v. Cole (1847), IG M. & VV. 128, at p. 135. 
(f) J^" A Dchtor, [19l:i] 3 K. B. 11. 

(d) BoaLr v. Mayor (1805), 19 C. B. (n.s.) 76 

(e) In Carkr v. While (1884), 25 Ch. D., at p. 070. 


Suretyship am> (iiAUANTKKS. 

! h 


lo^istration. but the ( ioilir..r did m.t n-istor. luntlior 
did he enter into possession when lie became entitled lo 
do so: conseqnontly, H. i.i.d P. banknipi. 
the no„d,s were h)st, an<l the sureties were lield dis- 
•haryed oidy to the extent of the vahic of the j^^oods a). 
But mere passive acquiescence by the obhuee in acts 
which are contrary to the conditions ot a bond will imr 
relieve the sureties (g). 

■). The absolute dischar-e ol the principal is th.> 
dischar-o of tlM surety (A). But a covenant enteied 
into between debtor and creditor tliat the latter will 
not sue the former, and with reservation ai;ainst tf,e 
surety, will not release the surety (0- And an a-ree- 
inent whi(Oi purports to release the debtor, but win. 1, 
reserves ri-hts against the sureties, will, in -eneial. be 
construed as a covenant not to sue {/•). The dischar._.i 
ot a surety on one a-reejnent will not release another 
surety b.)und for the same debt bv a sepaiate a.orcement 
from his (Ui-u-ement, unless the etfect of sucii discharge 
is to take away or to affect injuriouslv that othef-s 
ridit to contribution; thou-h if that otlier suretv 
became such on the faith of the liability of the one. or 
if the sureties are joint sureties, the discharge of the 
one acts as a release (/). 
6. De.ith of a surety will, if the consideration be 

(/) Wnlffa,ulA,wl/,tr v. J«y (lS7l>), ].. J{. 7 Q. IJ. 75,;. 

('/) JIayor oj Durham v. Fo,rhr ()88<J). 22 Q. |{. D. -.'M whore ill 

(A) Vommcrcinl Bank of Timnania v. Jones. [ls.)31 \ q „. 
fch 401. ^''"'^ ''■ '^'"^'""'"^ Prorincml Bank of K„,la]id, [J 910] 
(0 Price V. Barker (iSoo), 4 E. >t ]J. 700 

(A) Lor.1 H.iTHERLEY in (Jn.n V. Wynn (1869). L. V. X Ch -^f 
pp. 2UI, 20t). ■ '■ 

(/) Ward V. Xaiiomil Bank of Xa,- Zmland (isS3). 8 App. Gas. 7oo. 

Discharge of the Surety. 


(ii visible, revoke a continuing giiarantee, and his estate 
i-. not liable tli»u-e(»a for advames made subsequently to 
iiiid with notice of the death (/n) ; but on a joint ami 
M.'veral coiitinuini,' guarantee, the death of one surety 
does not ])cr nc release his lo-suietie^ (n). Xor, if the 
tojxsideration for tlie guarantee has been given once 
lor all, v.-ill tiie deatii of the surety release liis estate 
from future liability under the guarantee (o) ; and if 
any notice is required to revoke a continuing guarantee, 
meto knowledge of the surety's death is not sufficient 
to determine tJie liability (p). 

7. If the undertaking to beccjiiie surety be entered 
into on the faith that anotiier shall also become a 
surety, and that other refuses to, or for any other 
reason does n^t. join in the guarantee, those who have 
already executed it are entitled to consider their liability 
at an end (7). 

y. Whether a guarantee may be revoked by the 
surety depends upon circumstances, but speaking gene- 
rally, it may be said that if the consideration for the 
gitarantee has been given once for all, the gniarantee 
is irrevocable save by mutual consent (r) ; if it be a 
continuing guarantee and tlie consideration is divisible, 
it may, as regards futtire transactions, be revoked by 
notice (m). Whetlier, in the abs(iuce of express stipu- 
lation, a guarantee given to secure the fidelity of a 
servant can be revoked, is open to question ; it seems 

[lit) Coullhart v. Ckmentnon (1880), 5 Q. B. 1). 42. 

in) Bechtl V. Addyman (1882), 9 Q. B. D. 783. 

(o) Lhyd'd V. Harper (1881), 10 Ch. 1). 2W. 

'.p) hi re Cracc, [l!i02] 1 Ch. 733. 

iq) Ward v. National Bank of Xeu- Zealand (1883), 8 App. Cas 
loo. Soe, for an examplo, Klli'.imere Prew.ry Co. v. Coover. [189'il 
1 g. B. 75 ; 1 Com. Cas! 210. 

;r) Lloyd's V. Uarpir (1881), hi Ch. D. 290. 




Suretyship \su Glarantkks. 

that m such a ihe revocation camiot bo iniD't- 
'hato ami pn.bably a notice sullicit'ut to enable th- 
e.nployn.ent to bo lawfully deteruune.i would at lea^t 
bo required (t). 

9. By the Partnership Act, 1890, s. 18, a continuiiv. 
Muarautee ^.ven to a finu or to a third person in respect 
ot the transactions ol a fir.n, is, in the absence <.f agree- 
ment to the .'ontrary, revoked as to future transactions 
by any ciuiu-e in the constitution of the firm. 

10. Neither the discharge in banlvruptcv of the prin- 
cipal debtor, nor the accept .uce of an arrangement bv 
his creditors, will oporate to discharge sureties for his 
debts (w). 

Statute of LimUations.-ms begins to run in favour 
ot the surety when the cause of acthm is complete 
Generally where there is a present debt and an a-n... 
ment to pay " on demand," a for pax-ment is 
not a condition precedent to the right to sue (x), but 
in the case of a surety, the debt is < onsidere.l to be 
collateral, and if his promise is to pav on demand 
no right of action accrues against him, until a demand' 
for payment has been made (//). 

(0 In re Grace, [IDUJ] 1 Ch. 7;J3. 

'") Bankruptcy Act, 1914. ss. l(i (20) 28 (4) 

fx) AoWo/i V. EUam (1837), 2 M. t W 401 

'V^ Bradford Old Bank v. SHtdiffe, [.i)18] 2 K 1} 8« 

( 471 ) 


Tins section dealH with rij^hts or loss .similar, 
but really distinct. In each case some person ac({uir».'s 
rights over tlie property of another, not with the inten- 
tion of retainin-,' Mieui, but of surrendering them, wlien 
certain liabilities are satisfied. At the same time, the 
distinction in the relationships produced in each case is 
well marked. 

In a pledge, the possession of the property but not 
the ownership passes to the creditor ; a ri^ht to sell 
accrues to hi»u in certain eventualitie.s. In niorti^age, 
the property in the thing mortga-ed is conveyed to 
the mortj;a-ee conditionally, the possession, until de- 
faidt, "ienerally remaining in the original owner. In 
lien, the possession is with the creditor, the ownership 
with the debtor, but there is in most cases no right of 
sale (a). 


This is a delivery of goods by a debtor to his creditor, 
as security for a debt. Its effect is to transfer pos.session 
and consequent rights, and therefore the pawnee can 
bring an action for the return of the goods if they are 
taken from him; so also can the pledgor. Thjre " 
also an implied undertaking on the part of the p, .i,'.'i 
to return the article when the debt is paid at the ;a!;e(l 
date, or if no time is stated, then whenever the pi .r \ 
pays or makes proper tender, and the pawnor, 

{r»);^See Ooggs v. Bernard (IH)^), 1 Sm. L. C. {12th td.), at p. 218. 


Pawn, Mohtuaoe anm 1,ikn, 

uiulertiilc.'s that it is his projnsitv (b). A man cauu-.t 
nidinitilv |.h3(h4o i)i()|M"itv which tl.M>s hflmii: t. 
him ; hut to this tht!i«' are i'.\(»f|)ti(ins (r). 

Thf |..i\vti.!o niiKst us.! ..idiuarv <lili^cm•c in hi- raiv 
of tlio \>U'A'j^ii, but it. uufwithstauiliiiL: such dih-iMicc, it 
H lost. Ill) iucius no lial»ihty. If then the ph-d^, he 
•tolen, the piiwnce must show thai it was not hnst in- 
want of what an oidinaiily i>iiideiit inaii wouhi hav.- 
don,' to ensure its .safety ; and if notwitlistandiui; it 
\va> taken hy robbery, he is not bound to rrpluce it ((/). 
Ho must not use ^oods pled'.'cd uidess they are such a> 
will not deteriorate by wc.:.. and even in such a ca-- 
he them at his peril (d). 

lie obtains a power of saK^ when tlefault is mad.- iu 
payment of tlie d-bt at the .stipuhited time; or il n., 
time is .stipuhited. tlian after a propei' demaml t,,i 
pavmeiit lias been made, and a reasonable time for i)ei- 
formance has becin allowed (/). Any excess obtaineil 
by the sale beyond the amount ne, cssary to licpiidnte 
the debt uud expenses mu,,t be returned ti. the 

A pawnee usually loses liia riiihts by partiii- with 
the po-,ftessiou of his ])Ied-e. but lie may redchver it 
to the pledgor for a limited purpose without losing; .such 
rights (g). 

Pledges given to pawnbrokers, i.e., to persons carr\ - 
ing on the business t.f taking goods and chattels in 
pawn (/<), are subject to the provisions of the Pawn- 
brokers Act, 1872. Among^.^ these may be noted— 

{l>) CliLtsm-ni V. Kxiill (I Sol), (J Ex. 344. 

(c) Sfc a/,/r, pp. 141 — 144, Factors Act, Ish'j. 

(d) Cogy.s v. Ihrmrd (1703). 1 Sm. L. C. (I2lh id.) J91. at p 20l 
(/) Story's Bailment.'', h. 3(J«J. 

•;7) ^or■h WL-^Urn v. Poyni^i, [iSliJj A. C. oii, 
(h) 35 & 30 Vict. c. 93. «. T.. 

Mort«;acje ok Pkh-onal Property. 47;; 

( I) tliiit th.' Ai t ilors iK.t iipply tn loanK of over 1'10(<) ; 
(J) i»ii\vn-tirk«(t.s must Ix? !;iv<Mi for the plrdj-e (/(•) ; 
ii) I'v.Tv |»l.'(lt:<' is U, ho lo.le.^timlil*' within twclvw 
numt'ts and sov.'M days {I); (t) pl.-.lycs ulx.v.. t.Mi 
^hilliuirs in value, not ro(l«'.>ine<i. are to b..; .s(»Kl by 
auction. iiMti tlios.- of ten sliillin.;^ <>r under are to he 
torfeited (//-; ; (.")) pledi-OM over ten .sliilliny.s ar« re- 
deemable till sa!e(H); (G) spefial contractH may be 
made on loans ..! above forty shillinus. ^subje(■t to -ivinu 
ii special pawn-ticket >i-ntHl by tiie pawnl)roker and a 
duplicate signed by tlio borrower («). There are, in 
addition, maiiv provisions, the objects of wliich are to 
•Misure that the li-ht peison <iets back the pledt'e upon 
|)aymt'i)t. and to restrain the commission of crimes. 

Mortgage or Pkiwonal Property. 

Jn this place it i.s intended to restrict the remarks 

made on mort;4ages to such as affect personal propert}- ; 

luforuiation as to mortgages on real property slumld be 

souglit in special works on that subject. Mortgages of 

l)ersonal property are in most instances within the Bills 

of Sale Acts (/<). In cases in which these Acts do not 

apply, as, for instance, where .shares are mortgaged, 

the mortgagee has an implied powr to sell the shares 

ou default by the mortgagor in payment of the amount 

duo at the time appointed. If no time for payment 

has been fixed, the mortgagee must give a reasonable 

notice to the mortgagor re(|uiring payment oji a day 

certain before lie cati sell (7). If the mortgage wa.s by 

(1) Section 10. 

(A-) Section 14. 

(/) Section Ifi. 

ip) See poiit, pp. 474 ct 6e({. 

iq) Dcicrget, v. Sandeman. Clarke d Co., [1902] 1 CL. 57!t. 

(m) Sections 17, I'J. 
(n) Section 18. 

i'j} Section 24. 


Pawn, Mortgage and L. 

(lectl. the mortira'.'ee would liavo the power.s ronferrcd 
in- si'cts. 10 and 20 of tho Convoyancinu Act. 1881. 

Bills of Sale. 

Those arc roLiidatod cliielly by the Bills of Sale Acts, 
1878 and 1882. The obj.vt of the f(;rmer Act is to 
prevent false credit beini: irivon to persons in apparent 
possession of .^oods which in reality belong to others; 
the object of the latter Act is to protect impecunious 
persons, who. it was believed, were often induced to 
siun complicated documents of charue whicli thev did 
not understand. Acconlin-ly, it will be found that the 
Act of 1878— whii'h ori-inally applied to all forms of 
bills of sale— makes void as against creditors and those 
representinu them a secret disposition by bill of sale of 
chattels of which the L;rantor retains pos.session. Or 
tlio other hand, the Act ol 1882. which applies onlv to 
bills of sale i^iven by way of security for iiKmey, totalK" 
invalidates such bills of sale if they are not in tlie 
prescribed form, and makes them of none effect even 
between the parties. Although, so far as bills of .-^ale 
by way of security for money are concerned, the Act 
of 1878 is superseded by the Act of 1882, some of the 
provisions of the former Act are retained in the latter, 
and are therefore applicable to both classes of bills vi 
sale. I.e.. absolute or by way of secuiity. For instance, 
the definition of bill ..f sale is the same tor I»uth .Vets. 
The term •' I)iil ..f -ah; "" includes not oidy bills of sale 
strictly so (ailed {t.c. assignments ot pei:M,nal chattels 
<iivinu a title without delivery), but also many other 
documents, viz., assitinments. transfers, declarations, 
of trust without transl.-r. inventdries of ;^()ods with 

Bflls of Sale. 


receipt thereto attached, or receipts for purchase 
moneys of t^'oods. and other assurances of personal 
chattels, licences to take possession of chattels as 
security for any debt, iind also any a^'reoinent, whether 
intended or not to be followe.l by the execution of any 
other instniment. l)y which a riirht in equity to any 
personal chattels, or to any charge or security thereon, 
shall be conferred (r). Also any attorntuent or auree- 
iiiont. except a mininji; lease, whereby a power of 
distress is oiven. or aiireed to be t^qven. by way of 
security for anv debt or advance and which reserves 
rent as interest, is to l)e deemed a bill of sale so far as 
tiie distress is ccmcerned, savinu; the rights of a mort- 
uaiice of lands already in possession who demises to his 
tenant at a fair ren<- ^s). The relaticmship of landlord 
and tenant created b^ m attornment clause will not be 
alYected for any other purpose (/^ 

But the terra " bill of sale " is not to include assign- 
ments for the benefit of creditors («), marriage settle- 
ments (t). transfers of ships or shares therein, transfers 
of '.^'oods in the ordinary course of trade, bills of lading, 
or any documents used in the course of trade or business 
as proof of the pos^.-ssion or control of or authorising 
the possessoi' to transfer or receive goods, assignments 
of fixtures, unless separately assigned, or debentures of 
incorporated companies {>/). 

(r) Section 4 of the Act of 1878. 

(a) (1878). s. »> ; Ex parte Kennedy (1888), 21 Q. B. D .184 

(t) Mumjord \. Collier (18'.R)), 2r> Q. B. D. 279. 

(«) Tliouu'h cxprr-scd to o.xeluJo civditors having noiiw of the 

ri«ar. . ?. » not come in within a giv. n time (HndUy v. Iktdom, 
lifsyoj 1 y. tj. (i4(>). 

(X) Including agn-enients to settle on marriage, even fhoiich 
informal and notimder «eal (Wrr^man v. Lyon, [iSiM-J Q. B. ]ii2) 

(V) Re Standard Mnnufacliiring Co., [18!tl] 1 (,h. (127; Clark v. 
Balm. Hill <fc Co., [l<R>s] 1 K. B. (Mil ; (1882). s. 17. 


Pawn, Mortgage and Lien. 

Veibal <'()iitia('ts are uot within the Acts, which strike 
at (lociunents and not at transactions (2) ; nor is anv 
(locuiiKJUt which is merely ancillary and which does not 
uiv"^ the transferee his title ; hence, when [)roperty and 
possession pass under a verbal arrangement, a receipt 
for money payable in connection therewith given subse- 
quently, will not be a bill of sale (a). When goods have 
already passed out of the possession of the transferor, 
documents subsequently executed evidencing the trans- 
action are not bills of sale (6) ; for, as Cotton, L.J.. 
said in Mamka v. Meadows (c). the documents to be 
within the Act imist be " documents on which the title 
of the transferee of the goods depends, either as the 
actual transfer of the property, or an agreement to 
tran.sfer, or as a nuiniment or document of title taken, 
to use an expression found in some of the cases, at the 
time as a record of the transaction." 

In considering whether a document, apparently uot 
within this definition, is nevertheless covered by it, 
the court not only may but nuist inquire into the re(tl 
nature of the transaction. Thus, where the real 
agreement was one to lend money u{)on the security 
of goods in which the borrower had an interest, but 
took the form of a puichase of tJie goods by the lender, 
followed by a hire-purchase agreement with the 
borrower, the court held the latter agreement to be 
a bill of sale {d). 

(;) Xorth Central Wagon Co v. .17. .V. ,1 /,. 7iVi7. Co. (IftbT;, 
35 Ch. D. 191 ; Ncwlove v. Shrewsbury (KSSS), 21 y. 15. D. 41 

(a) Itarnsay v. Margrett, [18943 i2 Q- H- IS- 

(6) Chorksworth v. MMt, [1892] A. C. 231. 
Jc) (1881), 7 Q. U. D. 80; and see J-Jx purlc Hubbard (1880), 
17 Q. B. D. 090. contrasting it with Ex j^irte I'ursom (1880), 10 
g. K, ]), 532: North Central Wa^on Cn. v. Mmirh-^ti-'r, Sheffield and 
Lincolnshire Rail. Co. (1888), 13 App. Cas. 554. 

id) Bccldt V. Tower Assets Co., [1891] 1 Q. IJ. 039; Mellor v. 

Bills of Sale, 
The Acts refer onlv to bills of 


er only to bills of sale of personal chattels, 
a term which will include fixtures and f;rowin<r crops 
if arfsiuned separately from the land to which they 
are attached ; also trade machinery thouf^h attached to 
the land. But assij;nments of stocks, shares, contracts, 
and other choses in action are not assi<,'nments of 
personal chattels, and hence are nfit affected by 
these Acts (e). 

Bills of sale are of two kinds ; (i) absolute, such as 
pass the property absolutely to the transfeiee ; (ii) con- 
ditional, such as pass it subject to a condition revesting 
It upon the performance of the condition, viz., upon the 
payment of money. The Act of 1882 is confined in its 
operation to conditional bills. 

Requisites and Formalities. —With one excepti(.n the 
provi.sions for registration are the same for botii Acts (/ ). 
1. The bill nuist be registered within seven davs after 
execution. To the registrar must be presented (i) the 
original bill, with every schedule or inventory annexed 
to or referred to in it iu) ; (ii) a true copy of such bill 
and scliedules, and of every attestation of the execution 
of the bill of sale ; (iii) an affidavit verifying the execu- 
tion and attestation, stating also tlie time of execution, 
and the names, addresses, and occupations of the grantor 
and of every attesting witness. The copy and affidavit 
must be filed within the seven days. It is not necessary 

-V«rM. [1903] 1 K B. 220, nffinued in iho Hou.c. of Lords, ,ub mm 
Mofia V. Peppvr, [1905] A. C. 102. 

(t) (1878), s. 4. 

(/) (1878), as. 8, 10; (1882), ss;. 8, lit. 

(<j) A bill of sal.- containod an assignin.Dt of " 1,800 books as txt 
cataloRu*' : and it wan dt-cidvd th^st f h<- entalojrue was not a schrduio 
[T893]'ry ^82) '^"*^'^'^'*^ "-gi^tration (DavicUon v. Carlton Bank, 


Pawn, Mortgage and Lien. 


tOr tlie LiiautDr tt) specify evoiy oc(ii})atiou in respect of 
which he is enjzaued or liabk>. it is sulficieut to state his 
occupation ill a concise way, and one in which he would 
be reco^fnised by those ac.(]uainted with him and his 
})iirsuits {h). 2. Tlie execution must be attested and 
tlie bill explained by a sohcitor. though if the bill be 
conditional this is no longer required. In the latter 
case, any credible witness not a party to the bill will be 
sutlicient (i). This is the exception above referred to. 
3. The bill must contain a statement of the considera- 
tion and tliis nmst be substantially true ; and it will be 
sufficient if the facts are accurately stated, either as to 
their IcLial or as to their mercantile and business effect. 
It would not be correct tr describe money retained by the 
i^rantee as '" now paid " to the t;rantor, unless it was 
retained in respect of a debt actually due (k). Nor can 
monev advanced contemporaneously with the execution 
of the deed be properly stated as " now owini:." It does 
not become due until the f\iture date specified in the bill, 
and should be described as '' now paid " (/). 4. If made 
with n dcfcasauv t' {i.e.. any ii'.rroement w4uch may enable 
the bill to be avoided) or subject to any condition or 
declaration of trust, the defeasance, condition, or 
declaration of trust must be set forth on the same 
paper which contains the bill ; and it nmst be con- 
tained in the registered copy (in). Thus where a 

;/i) Fivl V. Hobituioii (WJi), (>:} L. J. Cli. :{21. St-c hLso KemhU v, 
Addison. I lltOO] 1 (). K. 4.30. 

(f) (1SS2), s. 1(1. 

(A) (ISTS), b. S; (1882), s. 8. isci- //( re Vliaroitj Cros-^ liaid 
(IhSl). l(i Cli. 1). 3."); Ex ]mrlt Iloljih (1882), 10 Ch. D. IKS; Ex 
pork. Firth (18S2), I'J Ch. D. 41".» ; likhird.son v. l/iini« (188'.»), 
•2:'. Q. B. 1>. 2tJ8 ; Parsons v. Equittiblc Itux'ytmenl Co., [1910] 2 Ch 

(/) Davits V. Jtuhins, [11)00] 1 Q. B. KW. 

{m) (1878), s. 10 (3). 

Bills of Sale. 


pioinissoiy ui»te was yiveu at the same time, auJ ior 
tlie same consideratiou as the bill, payable by instal- 
ments, and there was a proviso that if the instalments 
became in arrear the whole debt might be claimed 
at once, it was lield that this constituted a defeasance, 
since by payment of the promissory note the bill of sale 
would be defeateil, and not being contained on the 
same paper as the bill, the latter was void (w). It does 
not matter in whose favour the defeasance or condition 
(operates (o). 

If the above requisites are not complied with, the bill 
of sale, if an absolute bill, is void as regards all goods 
covered by it in the apparent possession of the giantor 
against the following : (1) Trustee in bankruptcy of the 
urantor ; (2) assignees for the benefit of his creditors ; 
(3) those seizing the goods comprised in the bill under 
executions ; (4) all persons on whose behalf the goods 
have been thus seized (/)). To avoid these penalties 
" there must be something done which plainly takes 
[the goods] out of the apparent possession of the debtor 
in t!'e eyes of everybody who sees them " (q). A 
conditional bill of sale which is not duly attested or 
registered or which does not truly set forth the con- 
sideration is void in respect of the personal chattels 
comprised therein (r). 

A bill of sale, when registered, takes its priority over 
others according to the date of registration {s) ; no 

( ;i) Couiisdl V. London and WiMnmi-ster Loan Co. ( 1887), 19 Q. B. 1). 
5r> Tlio nolv would In- good [Monetary Advauct. Co. v. Cater (1888), 
20 Q. 1?. U. 7>J- See also Edwardx v. Marcus, [1894] 1 Q. B. 587). 

(o) Edtmrdc v. Marcus, sujira. 

(p) (1878), s. b. . „.. 

In) Et varle Jay (1874), L. R. 9 Ch., at p. 704. 

(r) (1882), s. 8. As to tiio effect of omitting a defeasance or 
condition from a conditioiml b»il of suk, bcc jiosf, p. 4i53 

(s) (1878), 8. 11. 





Fawx, Mortga(;e and Lien. 

transfer need bo renistorod (t) ; at the expiration of 
every fiv(! years re-re^istration is necessarv (;/). 

Except where otlierwise imlicated, the above applies 
to all bills of sale. It is important here to notice a 
ftirther provision which a])i)li('s to absolute bills of sale 
only. If duly reuistcrcd tliey are ncit within the order 
and disposition clause of the Bankruptcy Act (c). The 
cxoinptiou diics not applv to bills of .sale ;,'iven by way 
of sccuiity (c). 

The Act of 1882. — It remains to consider the pro- 
visions of tlie Act of 188'2. wluch applies to couditicmal 
bills of sale only. A bill of sale piven by way of security 
for the payment of money, must be made in accordance 
with the form in the sch»>dul(' to the Act under penalty 
of avoidance (//) ; i.e., it must i)roduce the precise 
le^al effect — neither more uor less — of that form, it 
must preserve all the characteiistics of the form, anil 
it )nust be so framed as not to deceive any reasonable 
person as to its exact meaning (:). The form is as 
follows : 

Form of the BUI oJ Sale. 

inaile tlie day of 

(.if tlio Olio part and ('. J>. of 

** This indenture 
liftwffn A. 1>. of 

of the other luirt Wjtnkssktu tiiat in coii- 
>i(Jcration of tlic .--uin of •C now |)ai(l to A. Ji. 

U) (IsTs). s. 11. 

[ii) U«"«). ^- 1'^- 

((•) (IS7H), s. 20 ; ami see jxnt, y. •">.");$. 

(.r) (1882), s. 15. 

{}j) (1882), s. <». 

(?) A'i- parte Stanford (188t)), 17 C^ B. D. 259 ; llioma-i v. Kelly 
(1888). l.S App. Cas. 500. The fact that the traosaction cannot be 
expressed in a docuiiunt in tlie .statutory form will be no excuse for 
diverging from it (K.t park P(ir/<ons (1880), 10 Q. B. 1>. 532). 

Bills of Sale. 


hy ('. U the receipt of which the !*ai(l A. B. herel)y acknow- 
ledges ['</• irlidlmr thi the consiil, rnliiiii mnij Ix] he the 
>aid A. J'., (lot h hereby assign unto ( ". 1 ). his executors 
achiiinistrators and as-siiins all and sinf;ular the several 
chattels and thin,i?s s|.ecitically described in tlie schedul ■ 
hereto annexed by way of security for the payinent of the 
sum of £ and interest thereon at the rate of i>er 

cent. |ier nniunn [<<r whiUrtr else may he the ratt\. And the 
said A. li. duth further agree and declare that he will duly 
pay to the said t". D. the i.rincipal sum aforesaid together 
with the interest then due by equal payments of 

tj yji ti,e (lay of [or whatmr d-c 

imvj be the M'n>ulaltd titms or time, of payment]. And the 
said A. li. doth also agree with the said C. I), that he will 
[hi f insert terms on to inmrnnce, jMiyment of rent, or otherwise, 
uhlch the parlies ntei;/ agree to for the imintenunce or deftasauce 
of I hi seairiti/]. 

" Provided always that the chattels hereby assigned 
-hall not be liable to seizure or to be taken |K)ssession of 
hy the said V. 1). for any cause otliiT than those sjieciJied 
iii p. 7 of the IJills of 8ale Act (1878) Amendment Act, 

"In witness, etc. 

" Signed and sealed by the said A. B. in the presence of 
me E. F. [uM ivilncsss name, address, and description]." 

As sliowinj^ the strictness with wliich the form must 
bo toUowed, reference may be had to the foUowinu cases 
in which a divergence was lield fatal. Separate i-rants 
l)v separate -irantors of chattels belonging to them 
separately are not within the form, which contemplates 
only one grant (a) ; but the joinder of an unnecessary 
party who is not a grantor and who does not enter into 
any ccn'cnant will not affect the vahdity of the instru- 
ment (b). Omission of th